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
Interstate Power Company
(Exact Name of Registrant as Specified in Charter)
Delaware 1-3632 42-0329500
(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification
No.)
1000 Main St., P.O. Box 769, Dubuque, IA 52004-0769
(Address of principal executive offices) Zip Code)
Registrant's telephone number: (319) 582-5421
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
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
("IPC"), and AMW Acquisition, Inc., a wholly owned subsidiary of
WPL incorporated under the laws of the State of Delaware ("AMW"),
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 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, which was unanimously approved by the
Board of Directors of each of the constituent companies, is
expected to close promptly after all of the conditions to the
consummation of the Merger, including obtaining 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 Interstate Energy,
as the holding company of the combined enterprise, will be
registered under the Public Utility Holding Company Act of 1935,
as amended. Interstate Energy will be the parent company of
WPL's present principal utility subsidiary, Wisconsin Power and
Light Company ("WP&LC"), IES's present utility subsidiary, IES
Utilities Inc. ("Utilities"), and IPC. Following the Merger, the
non-utility operations of WPL and IES, Heartland Development
Corporation and IES Diversified Inc., respectively, will be
combined under one entity to manage the diversified operations of
Interstate Energy.
Under the terms of the Merger Agreement, each
outstanding share of common stock, no par value, of IES will be
cancelled and converted into the right to receive .98 of a share
of common stock, par value $.01 per share, of Interstate Energy
(the "Interstate Energy Common Stock") and each outstanding share
of common stock, par value $3.50 per share, of IPC will be
cancelled and converted into the right to receive 1.11 shares of
Interstate Energy Common Stock. The outstanding shares of common
stock, par value $.01 per share, of WPL will remain unchanged and
outstanding as shares of Interstate Energy Common Stock. As of
the close of business on November 10, 1995, WPL had approximately
30.8 million common shares outstanding, IES had approximately
29.3 million common shares outstanding and IPC had approximately
9.6 million common shares outstanding. Based on such
capitalization, the Merger will result in the common shareowners
of WPL holding 43.9% of the common equity of Interstate Energy,
the common shareowners of IES receiving 40.9% of the common
equity of Interstate Energy and the common shareowners of IPC
receiving 15.2% of the common equity of Interstate Energy. Each
outstanding share of preferred stock, par value $50 per share, of
IPC will be unchanged as a result of the Merger and will remain
outstanding. In this Current Report on Form 8-K, unless the
context otherwise requires, all references to Interstate Energy
Common Stock include, if applicable, the associated rights to
purchase shares of such common stock pursuant to the terms of the
Rights Agreement between WPL and Morgan Shareholder Services
Trust Company, as Rights Agent thereunder, dated as of February
22, 1989.
The parties expect that the dividend at the effective
time of the Merger will be the dividend then being paid by WPL.
Subsequent dividend policy will be developed by the Board of
Directors of Interstate Energy.
The Merger is subject to customary closing conditions,
including, without limitation, the receipt of required shareowner
approvals of WPL, IES and IPC; and the receipt of all necessary
governmental approvals and the making of all necessary
governmental filings, including approvals of state utility
regulators in Illinois, Iowa, Minnesota and Wisconsin, the
approval of the Federal Energy Regulatory Commission, the
Securities and Exchange Commission (the "SEC") and the Nuclear
Regulatory Commission, and the filing of the requisite
notification with the Federal Trade Commission and the Department
of Justice under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the expiration of the applicable waiting
period thereunder. The Merger is also subject to receipt of
opinions of counsel that the Merger will qualify as a tax-free
reorganization, and assurances from the parties' independent
accountants that the Merger will qualify as a pooling of
interests for accounting purposes. In addition, the Merger is
conditioned upon the effectiveness of a registration statement to
be filed by WPL with the SEC with respect to shares of the
Interstate Energy Common Stock to be issued in the Merger and the
approval for listing of such shares on the New York Stock
Exchange. (See Article IX of the Merger Agreement.) It is
anticipated that shareowners will vote upon the Merger at the
upcoming annual meetings in the second quarter of 1996.
The Merger Agreement contains certain covenants of the
parties pending the consummation of the Merger. Generally, the
parties 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.
(See Article VII of the Merger Agreement.)
The Merger Agreement provides that, after the
effectiveness of the Merger (the "Effective Time"), the corporate
headquarters and principal executive offices of Interstate Energy
and WP&LC will remain in Madison, Wisconsin, the headquarters of
Utilities will remain in Cedar Rapids, Iowa, and the headquarters
of IPC will remain in Dubuque, Iowa. Interstate Energy's Board
of Directors, which will be divided into three classes, will
consist of a total 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. Lee Liu, the current Chairman of the
Board, President and Chief Executive Officer of IES, will serve
as Chairman of the Board of Directors of Interstate Energy for a
period of two years from the Effective Time. Mr. Wayne H.
Stoppelmoor, the current Chairman of the Board, President and
Chief Executive Officer of IPC, will serve as Vice Chairman of
the Board of Directors of Interstate Energy for a period of two
years from the Effective Time. Mr. Erroll B. Davis, Jr., the
current President and Chief Executive Officer of WPL, will become
President and Chief Executive Officer of Interstate Energy from
the Effective Time. Mr. Davis will also assume the position of
Chairman of the Board when Mr. Liu retires as Chairman. (See
Article VIII of the Merger Agreement.)
The Merger Agreement may be terminated under certain
circumstances, including (i) by mutual consent of the parties;
(ii) by any party if the Merger is not consummated by May 10,
1997 (provided, however, that such termination date shall be
extended to May 10, 1998 if all conditions to closing the Merger,
other than the receipt of certain consents and/or statutory
approvals by any of the parties, have been satisfied by May 10,
1997); (iii) by any party if any of WPL's, IES's or IPC's
shareowners vote against the Merger or if any state or federal
law or court order prohibits the Merger; (iv) by a non-breaching
party if there exist breaches of any representations or
warranties contained in the Merger Agreement or in the Stock
Option Agreements (as hereinafter defined), as of the date
thereof, which breaches, individually or in the aggregate, would
result in a material adverse effect on the breaching party and
which are not cured within twenty (20) days after notice; (v) by
a non-breaching party if there occur breaches of specified
covenants in the Merger Agreement or material breaches of any
covenant or agreement in the Merger Agreement or in the Stock
Option Agreements which are not cured within (20) days after
notice; (vi) by any party if the Board of Directors of any other
party shall withdraw or adversely modify its recommendation of
the Merger or shall approve or recommend any competing
transaction; or (vii) by any party, under certain circumstances,
as a result of a third-party tender offer or business combination
proposal which such party, pursuant to its directors' fiduciary
duties, is, in the opinion of such party's counsel and after the
other parties have first been given an opportunity to make
concessions and adjustments in the terms of the Merger Agreement,
required to accept. (See Article X of the Merger Agreement.)
The Merger Agreement provides that if a breach
described in clause (iv) or (v) of the previous paragraph occurs,
then, if such breach is not willful, the non-breaching party or
parties will be entitled to reimbursement of its or their out-of-
pocket expenses, not to exceed $5 million to each non-breaching
party. In the event of a willful breach, the non-breaching party
or parties will be entitled to its or their out-of-pocket
expenses (which shall not be limited to $5 million) and any
remedies it or they may have at law or in equity, and provided
that if, at the time of the breaching party's or parties' willful
breach, there shall have been a third party tender offer or
business combination proposal which shall not have been rejected
by the breaching party or parties or withdrawn by the third
party, and within two and one-half years of any termination by
the non-breaching party or parties, the breaching party or
parties accept an offer to consummate or consummates a business
combination with such third party, then such breaching party or
parties, upon the closing of such business combination, will pay
to the non-breaching party or parties an additional aggregate fee
equal to $25 million, if WPL or IES is the breaching party, or
$12.5 million, if IPC is the breaching party. The Merger
Agreement also requires payment of an aggregate termination fee
of $25 million, if WPL or IES is the Target Party (as hereinafter
defined), or $12.5 million, if IPC is the Target Party, together
with reimbursement of out-of-pocket expenses, by one party (the
"Target Party") to the other parties in the following
circumstances: (1) the Merger Agreement is terminated (x) as a
result of the acceptance by the Target Party of a third-party
tender offer or business combination proposal, (y) following a
failure of the shareowners of the Target Party to grant their
approval to the Merger or (z) as a result of the Target Party's
material failure to convene a shareowner meeting, distribute
proxy materials and, subject to its board of directors' fiduciary
duties, recommend the Merger to its shareowners; (2) at the time
of such termination or prior to the meeting of such party's
shareowners there shall have been a third-party tender offer or
business combination proposal which shall not have been rejected
by the Target Party or withdrawn by such third party; and (3)
within two and one-half years of any such termination described
in clause (1) above, the Target Party accepts an offer to
consummate or consummates a business combination with such third
party. The applicable termination fee and out-of-pocket expenses
referred to in the previous sentence will be paid at the closing
of such third-party business combination. The termination fees
payable by WPL, IES and/or IPC under the foregoing provisions
plus the aggregate amount which could be payable by WPL, IES
and/or IPC under the Stock Option Agreements may not exceed $40
million (for WPL or IES) or $20 million (for IPC) in the
aggregate. In addition to the foregoing, if the Merger Agreement
is terminated under circumstances that give rise to the payment
of the termination fee discussed above by the Target Party
referred to above and within nine months of such termination one
of the non-terminating parties is acquired by the same third
party offeror, the sole remaining party will be entitled to (i) a
second termination fee of $25 million, if WPL or IES is the
second target party, or $12.5 million if IPC is the second target
party, on the signing of a definitive agreement relating to such
business combination, and (ii) payment of any termination fee
paid to such second target party by the original terminating
party (i.e., first Target Party) pursuant to the termination of
the Merger Agreement. If only one party must pay expenses, or is
entitled to receive a termination fee as set forth above, such
party will pay or receive one hundred percent (100%) of the
applicable expenses or fee. If two parties are required to pay
expenses or entitled to receive any such fee, each such party's
percentage of such expenses or fee will equal a fraction, the
numerator of which shall be, in the case of IES or IPC, the
number of shares of Interstate Energy Common Stock which would
have been issuable (on a fully diluted basis) to such party's
shareowners, or, in the case of WPL, the number of shares of
Interstate Energy Common Stock (on a fully diluted basis) that
would have been retained by its shareowners, had the effective
time of the Merger occurred at the time the Merger Agreement is
terminated, and the denominator of which will be the aggregate
number of shares of Interstate Energy Common Stock that would
have been issuable to or retained by (in either case on a fully
diluted basis) the shareowners of the two parties required to pay
expenses or entitled to receive such fee had the effective time
of the Merger occurred at the time the Merger Agreement is
terminated. (See Article X of the Merger Agreement.)
Concurrently with the Merger Agreement, WPL, IES and
IPC entered into reciprocal stock option agreements (the "Stock
Option Agreements") each granting the other two parties an
irrevocable option to purchase a specified percentage of up to
that number of shares of common stock of the granting company
which equals a collective aggregate of 19.9% of the number of
shares of common stock of the granting company outstanding on
November 10, 1995 at an exercise price of $30.675 per share of
WPL Common Stock, $26.7125 per share of IES Common Stock or
$28.9375 per share of IPC Common Stock, as the case may be, under
certain circumstances if the Merger Agreement becomes terminable
by one or more parties as a result of one or more other parties'
breach or as a result of one or more of the other parties
becoming the subject of a third-party proposal for a business
combination. Any party whose option becomes exercisable (the
"Exercising Party") (i) will have the right to receive, under
certain circumstances, a cash settlement that would pay to the
Exercising Party the difference between the exercise price and
the then current market price and (ii) may request that the
granting company repurchase from it all or any portion of the
Exercising Party's option at the price specified in the Stock
Option Agreements. (See the Stock Option Agreements.)
Interstate Energy is expected to be the 34th-largest
investor-owned utility holding company in the United States based
on the 1994 combined revenues of WPL, IES and IPC of $1.9
billion. It is anticipated that Interstate Energy will have a
market capitalization of approximately $2 billion (based on the
current combined market capitalization of WPL, IES and IPC) and
assets of nearly $4 billion (based on December 31, 1994 combined
asset totals). It is expected that Interstate Energy will serve
more than 850,000 electric customers and 360,000 natural gas
customers in Iowa, Illinois, Minnesota and Wisconsin. The
business of Interstate Energy will consist of utility operations
and various non-utility enterprises.
A preliminary estimate indicates that the Merger will
result in net savings of approximately $700 million in costs over
10 years.
In response to the announcement of the Merger, Standard
and Poor's Corporation ("S&P") placed its ratings of WP&LC'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 WP&LC,
Utilities and IPC are expected to be "A+".
Moody's Investors Service ("Moody's") placed WP&LC'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 the divestiture of
their existing gas operations and certain non-utility operations
is a possibility under the new registered holding company
structure, but will seek approval from 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 Merger Agreement, the press release issued in
connection therewith and the Stock Option Agreements are filed as
exhibits to this Current Report on Form 8-K and are incorporated
herein by reference. The brief summaries of the material
provisions of the Merger Agreement and the Stock Option
Agreements set forth above are qualified in their entirety by
reference to each respective agreement filed as an exhibit
hereto.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
The exhibits listed in the accompanying Exhibit
Index are filed as part of this Current Report on
Form 8-K.
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 hereunto duly authorized.
INTERSTATE POWER COMPANY
Date: November 17, 1995 By: /s/ Wayne H. Stoppelmoor
Chairman of the Board,
President and Chief
Executive Officer
INTERSTATE POWER 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.*
(2.2) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among WPL Holdings, Inc. and IES Industries Inc.
(2.3) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among WPL Holdings, Inc. and Interstate Power
Company.
(2.4) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among IES Industries Inc. and WPL Holdings, Inc.
(2.5) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among IES Industries Inc. and Interstate Power
Company.
(2.6) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among Interstate Power Company and WPL Holdings,
Inc.
(2.7) Option Grantor/Option Holder Stock Option and Trigger
Payment Agreement, dated as of November 10, 1995, by
and among Interstate Power Company and IES Industries
Inc.
(99) WPL Holdings, Inc., IES Industries Inc. and Interstate
Power Company Press Release, dated November 11, 1995.
__________________
* Certain of the schedules and exhibits to this document are
not being filed herewith. The Registrant agrees to furnish
supplementally a copy of any such omitted schedule or
exhibit to the Securities and Exchange Commission upon
request.
EX-2.1
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
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
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
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
(i 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.
WP\ 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 EX- 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.
:\W 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).
(fappointed 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.
TXT 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. Gleeson By:/s/ Erroll B. Davis, Jr.
Edward M. Gleeson Name: Erroll B. Davis, Jr.
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
Counsel Board, President and
Chief Executive
Officer
INTERSTATE POWER COMPANY
Attest:
By: /s/ Joseph P. McGowan By:/s/ Wayne H. Stoppelmoor
Joseph P. McGowan Name: Wayne H. Stoppelmoor
Secretary-Treasurer Title: Chairman of the
Board, President and
Chief Executive
Officer
AMW ACQUISITION, INC.
Attest:
By: /s/ Edward M. Gleeson By:/s/ Erroll B. Davis, Jr.
Edward M. Gleeson Name: Erroll B. Davis, Jr.
Secretary Title: President
EX-2.2
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among WPL Holdings, Inc., a
corporation organized under the laws of the State of Wisconsin
("OPTION GRANTOR" or the "Company") and IES Industries Inc., a
corporation organized under the laws of the State of Iowa
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, Interstate
Power Company, a corporation organized under the laws of the
State of Delaware ("Interstate"), and AMW Acquisition, Inc., a
wholly-owned subsidiary of OPTION GRANTOR organized under the
laws of the State of Delaware ("AMW"), are entering into an
Agreement and Plan of Merger, dated as of November 10, 1995, (the
"Merger Agreement"), which provides, inter alia, upon the terms
and subject to the conditions thereof, for the merger of OPTION
HOLDER with and into OPTION GRANTOR in accordance with the laws
of the States of Wisconsin and Iowa (the "IES Merger"), and the
merger of AMW with and into Interstate in accordance with the
laws of the State of Delaware (the "Interstate Merger", and
together with the IES Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and Interstate are
entering into certain stock option agreements dated as of the
date hereof, of which this Agreement is one, whereby the parties
hereto grant each other an option with respect to certain shares
of each other's common stock on the terms and subject to the
conditions set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
4.4(c) of the WPL Disclosure Schedule to the Merger Agreement and
by OPTION HOLDER as set forth in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR
hereby grants OPTION HOLDER an irrevocable option (the "OPTION
GRANTOR Option") to purchase up to that number of shares, subject
to adjustment as provided in Section 12 (the "OPTION GRANTOR
Shares"), of common stock, par value $.01 per share, of OPTION
GRANTOR (the "OPTION GRANTOR Common Stock") equal to a percentage
(the "Option Shares Percentage"), which Option Shares Percentage
is equal to the OPTION HOLDER's Participation Percentage as
defined below in subsection (e), of 6,123,944 shares of OPTION
GRANTOR Common Stock (being 19.9% of the number of shares of
OPTION GRANTOR Common Stock issued and outstanding as of November
10, 1995, the "Initial Number") in the manner set forth below, at
a price (the "Exercise Price") per OPTION GRANTOR Share of
$30.675 (which is equal to the Fair Market Value (as defined
below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, no par value, of OPTION HOLDER ("OPTION HOLDER
Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of
the Merger Agreement upon or during the continuance of a
Trigger Event (or if, at the expiration of such 180 day
period, the OPTION GRANTOR Option cannot be exercised by
reason of any applicable judgment, decree, order, law or
regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final
and not subject to appeal, but in no event under this clause
(iii) later than May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of the Public Service Commission of
Wisconsin of the issuance of the OPTION GRANTOR Shares by OPTION
GRANTOR and, if applicable, the acquisition of OPTION GRANTOR
Shares by OPTION HOLDER, and the approval of the Iowa Utilities
Board of the acquisition of the OPTION GRANTOR Shares by OPTION
HOLDER and, if applicable, the acquisition by OPTION GRANTOR of
the OPTION HOLDER Shares constituting the Exercise Price
hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 4.4(a) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, subject in the case
of the repurchase of the OPTION GRANTOR Shares pursuant to
Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable (except as otherwise provided in
Section 180.0622(2)(b) of the WBCL);
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 4.4(b) of the WPL
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION GRANTOR does not, and,
subject to compliance with applicable law and the OPTION GRANTOR
Articles with respect to the repurchase of the OPTION GRANTOR
Shares pursuant to Section 8(a), the consummation by OPTION
GRANTOR of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of
time, or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any
such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles or
the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument,
permit, concession, franchise or license (any of the
foregoing in effect on the date hereof being referred
to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
GRANTOR does not, and the performance of this Agreement by OPTION
GRANTOR will not, require any consent, approval, authorization or
permit of, filing with or notification to, any Governmental
Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated
hereby will not, violate, conflict with, or result in the breach
of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant
to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets,
which Violation, in the case of each of clauses (ii) or (iii),
would have an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
HOLDER does not, and the consummation by OPTION HOLDER of the
transactions contemplated hereby will not, require any consent,
approval, authorization or permit of, filing with or notification
to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement,
"Market/Offer Price") shall mean, as of any date, the higher
of (I) the price per share offered as of such date pursuant
to any tender or exchange offer or other offer with respect
to a Business Combination involving OPTION GRANTOR as the
Target Party which was made prior to such date and not
terminated or withdrawn as of such date and (II) the Fair
Market Value of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the
"Offer Price" shall be the highest price per share offered
pursuant to a tender or exchange offer or other Business
Combination offer involving OPTION GRANTOR as the Target
Party during the Repurchase Period prior to the delivery by
OPTION HOLDER of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with
the Manager and the other underwriters participating in such
offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
IES Industries Inc.
IES Tower
200 First Street S.E.
Cedar Rapids, Iowa 52401
Attention: Lee Liu
Fax: (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.
Fax: (212) 858-1500
B. If to OPTION GRANTOR, to:
WPL Holdings, Inc.
222 West Washington Avenue
Madison, Wisconsin 53703
Attention: Erroll B. Davis, Jr.
Fax: (608) 252-5059
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Attention: Benjamin F. Garmer, III, Esq.
Fax: (414) 297-4900
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
WPL HOLDINGS, INC.
By:/s/ Erroll B. Davis, Jr.
Name: Erroll B. Davis, Jr.
Title: President and Chief
Executive Officer
IES INDUSTRIES INC.
By:/s/ Lee Liu
Name: Lee Liu
Title: Chairman of the Board,
President & CEO
EX-2.3
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among WPL Holdings, Inc., a
corporation organized under the laws of the State of Wisconsin
("OPTION GRANTOR" or the "Company") and Interstate Power Company,
a corporation organized under the laws of the State of Delaware
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, IES Industries
Inc., a corporation organized under the laws of the State of Iowa
("IES"), and AMW Acquisition, Inc., a wholly-owned subsidiary of
OPTION GRANTOR organized under the laws of the State of Delaware
("AMW"), are entering into an Agreement and Plan of Merger, dated
as of November 10, 1995, (the "Merger Agreement"), which
provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of IES with and into OPTION
GRANTOR in accordance with the laws of the States of Wisconsin
and Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION HOLDER in accordance with the laws of the State of
Delaware (the "Interstate Merger", and together with the IES
Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and IES are entering
into certain stock option agreements dated as of the date hereof,
of which this Agreement is one, whereby the parties hereto grant
each other an option with respect to certain shares of each
other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
4.4(c) of the WPL Disclosure Schedule to the Merger Agreement and
by OPTION HOLDER as set forth in Section 6.4(c) of the Interstate
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR
hereby grants OPTION HOLDER an irrevocable option (the "OPTION
GRANTOR Option") to purchase up to that number of shares, subject
to adjustment as provided in Section 12 (the "OPTION GRANTOR
Shares"), of common stock, par value $.01 per share, of OPTION
GRANTOR (the "OPTION GRANTOR Common Stock") equal to a percentage
(the "Option Shares Percentage"), which Option Shares Percentage
is equal to the OPTION HOLDER's Participation Percentage as
defined below in subsection (e), of 6,123,944 shares of OPTION
GRANTOR Common Stock (being 19.9% of the number of shares of
OPTION GRANTOR Common Stock issued and outstanding as of November
10, 1995, the "Initial Number") in the manner set forth below, at
a price (the "Exercise Price") per OPTION GRANTOR Share of
$30.675 (which is equal to the Fair Market Value (as defined
below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, $3.50 par value, of OPTION HOLDER ("OPTION
HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of
the Merger Agreement upon or during the continuance of a
Trigger Event (or if, at the expiration of such 180 day
period, the OPTION GRANTOR Option cannot be exercised by
reason of any applicable judgment, decree, order, law or
regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final
and not subject to appeal, but in no event under this clause
(iii) later than May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of the Public Service Commission of
Wisconsin of the issuance of the OPTION GRANTOR Shares by OPTION
GRANTOR and, if applicable, the acquisition of OPTION GRANTOR
Shares by OPTION HOLDER, and the approval of the Iowa Utilities
Board, the Minnesota Public Utilities Commission and the Illinois
Commerce Commission of the acquisition of the OPTION GRANTOR
Shares by OPTION HOLDER and, if applicable, the acquisition by
OPTION GRANTOR of the OPTION HOLDER Shares constituting the
Exercise Price hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 4.4(a) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, subject in the case
of the repurchase of the OPTION GRANTOR Shares pursuant to
Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable (except as otherwise provided in
Section 180.0622(2)(b) of the WBCL);
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 4.4(b) of the WPL
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION GRANTOR does not, and,
subject to compliance with applicable law and the OPTION GRANTOR
Articles with respect to the repurchase of the OPTION GRANTOR
Shares pursuant to Section 8(a), the consummation by OPTION
GRANTOR of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of
time, or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any
such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles
or the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument,
permit, concession, franchise or license (any of the
foregoing in effect on the date hereof being referred
to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
GRANTOR does not, and the performance of this Agreement by OPTION
GRANTOR will not, require any consent, approval, authorization or
permit of, filing with or notification to, any Governmental
Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 6.4(a) of the
Interstate Disclosure Schedule to the Merger Agreement, OPTION
HOLDER has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the
Interstate Disclosure Schedule to the Merger Agreement, the
execution and delivery of this Agreement by OPTION HOLDER does
not, and the consummation by OPTION HOLDER of the transactions
contemplated hereby will not, violate, conflict with, or result
in the breach of any provision of, or constitute a default (with
or without notice or a lapse of time, or both) under, or result
in any Violation by OPTION HOLDER or any of its Subsidiaries,
pursuant to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets,
which Violation, in the case of each of clauses (ii) or (iii),
would have an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement or Section
1 or 3 hereof, the execution and delivery of this Agreement by
OPTION HOLDER does not, and the consummation by OPTION HOLDER of
the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, filing with or
notification to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement,
"Market/Offer Price") shall mean, as of any date, the higher
of (I) the price per share offered as of such date pursuant
to any tender or exchange offer or other offer with respect
to a Business Combination involving OPTION GRANTOR as the
Target Party which was made prior to such date and not
terminated or withdrawn as of such date and (II) the Fair
Market Value of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the
"Offer Price" shall be the highest price per share offered
pursuant to a tender or exchange offer or other Business
Combination offer involving OPTION GRANTOR as the Target
Party during the Repurchase Period prior to the delivery by
OPTION HOLDER of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with
the Manager and the other underwriters participating in such
offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
Interstate Power Company
1000 Main Street
Dubuque, Iowa 52004-0789
Attention: Wayne H. Stoppelmoor
Chairman
Fax: (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.
Fax: (212) 530-5219
B. If to OPTION GRANTOR, to:
WPL Holdings, Inc.
222 West Washington Avenue
Madison, Wisconsin 53703
Attention: Erroll B. Davis, Jr.
Fax: (608) 252-3137
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Attention: Benjamin F. Garmer, III, Esq.
Fax: (414) 297-4900
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
WPL HOLDINGS, INC.
By:/s/ Erroll B. Davis, Jr.
Name: Erroll B. Davis, Jr.
Title: President and Chief
Executive Officer
INTERSTATE POWER COMPANY
By:/s/ Wayne H. Stoppelmoor
Name: Wayne H. Stoppelmoor
Title: President, Chief
Executive Officer and
Chairman of the Board
EX-2.4
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among IES Industries Inc., a
corporation organized under the laws of the State of Iowa
("OPTION GRANTOR" or the "Company") and WPL Holdings, Inc., a
corporation organized under the laws of the State of Wisconsin
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, Interstate
Power Company, a corporation organized under the laws of the
State of Delaware ("Interstate"), and AMW Acquisition, Inc., a
wholly-owned subsidiary of OPTION HOLDER organized under the laws
of the State of Delaware ("AMW"), are entering into an Agreement
and Plan of Merger, dated as of November 10, 1995, (the "Merger
Agreement"), which provides, inter alia, upon the terms and
subject to the conditions thereof, for the merger of OPTION
GRANTOR with and into OPTION HOLDER in accordance with the laws
of the States of Wisconsin and Iowa (the "IES Merger"), and the
merger of AMW with and into Interstate in accordance with the
laws of the State of Delaware (the "Interstate Merger", and
together with the IES Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and Interstate are
entering into certain stock option agreements dated as of the
date hereof, of which this Agreement is one, whereby the parties
hereto grant each other an option with respect to certain shares
of each other's common stock on the terms and subject to the
conditions set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
5.4(c) of the IES Disclosure Schedule to the Merger Agreement and
by OPTION HOLDER as set forth in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR
hereby grants OPTION HOLDER an irrevocable option (the "OPTION
GRANTOR Option") to purchase up to that number of shares, subject
to adjustment as provided in Section 12 (the "OPTION GRANTOR
Shares"), of common stock, no par value, of OPTION GRANTOR (the
"OPTION GRANTOR Common Stock") equal to a percentage (the "Option
Shares Percentage"), which Option Shares Percentage is equal to
the OPTION HOLDER's Participation Percentage as defined below in
subsection (e), of 5,861,115 shares of OPTION GRANTOR Common
Stock (being 19.9% of the number of shares of OPTION GRANTOR
Common Stock issued and outstanding as of November 10, 1995, the
"Initial Number") in the manner set forth below, at a price (the
"Exercise Price") per OPTION GRANTOR Share of $26.7125 (which is
equal to the Fair Market Value (as defined below) of a OPTION
GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, $.01 par value, of OPTION HOLDER ("OPTION
HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of the
Merger Agreement upon or during the continuance of a Trigger
Event (or if, at the expiration of such 180 day period, the
OPTION GRANTOR Option cannot be exercised by reason of any
applicable judgment, decree, order, law or regulation, ten
business days after such impediment to exercise shall have
been removed or shall have become final and not subject to
appeal, but in no event under this clause (iii) later than
May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of the Iowa Utilities Board of the
issuance of the OPTION GRANTOR Shares by OPTION GRANTOR and, if
applicable, the acquisition of OPTION GRANTOR Shares by OPTION
HOLDER, and the approval of the Public Service Commission of
Wisconsin of the acquisition of the OPTION GRANTOR Shares by
OPTION HOLDER and, if applicable, the acquisition by OPTION
GRANTOR of the OPTION HOLDER Shares constituting the Exercise
Price hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, subject in the case
of the repurchase of the OPTION GRANTOR Shares pursuant to
Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION GRANTOR does not, and,
subject to compliance with applicable law and the OPTION GRANTOR
Articles with respect to the repurchase of the OPTION GRANTOR
Shares pursuant to Section 8(a), the consummation by OPTION
GRANTOR of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of
time, or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any
such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles
or the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument,
permit, concession, franchise or license (any of the
foregoing in effect on the date hereof being referred
to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
GRANTOR does not, and the performance of this Agreement by OPTION
GRANTOR will not, require any consent, approval, authorization or
permit of, filing with or notification to, any Governmental
Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 4.4(a) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable
(except as otherwise provided in Section 180.0622(2)(b) of the
WBCL);
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 4.4(b) of the WPL
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated
hereby will not, violate, conflict with, or result in the breach
of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant
to
(i) any provision of the Articles of
Incorporation or Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any
of its subsidiaries or to which any of them is a party,
or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets,
which Violation, in the case of each of clauses (ii) or (iii),
would have an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
HOLDER does not, and the consummation by OPTION HOLDER of the
transactions contemplated hereby will not, require any consent,
approval, authorization or permit of, filing with or notification
to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of (I) the
price per share offered as of such date pursuant to any
tender or exchange offer or other offer with respect to a
Business Combination involving OPTION GRANTOR as the Target
Party which was made prior to such date and not terminated
or withdrawn as of such date and (II) the Fair Market Value
of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the "Offer
Price" shall be the highest price per share offered pursuant
to a tender or exchange offer or other Business Combination
offer involving OPTION GRANTOR as the Target Party during
the Repurchase Period prior to the delivery by OPTION HOLDER
of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with
the Manager and the other underwriters participating in such
offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
WPL Holdings, Inc.
222 West Washington Avenue
Madison, Wisconsin 53703
Attention: Erroll B. Davis, Jr.
Fax: (608) 252-5059
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Attention: Benjamin F. Garmer, III, Esq.
Fax: (414) 297-4900
B. If to OPTION GRANTOR, to:
IES Industries Inc.
IES Tower
200 First Street S.E.
Cedar Rapids, Iowa 52401
Attention: Lee Liu
Fax: (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.
Fax: (212) 858-1500
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
IES INDUSTRIES INC.
By:/s/ Lee Liu
Name: Lee Liu
Title: Chairman of the Board,
President & CEO
WPL HOLDINGS, INC.
By:/s/ Erroll B. Davis, Jr.
Name: Erroll B. Davis, Jr.
Title: President and Chief
Executive Officer
EX-2.5
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among IES Industries Inc., a
corporation organized under the laws of the State of Iowa
("OPTION GRANTOR" or the "Company") and Interstate Power Company,
a corporation organized under the laws of the State of Delaware
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, WPL Holdings,
Inc., a corporation organized under the laws of the State of
Wisconsin ("WPL"), and AMW Acquisition, Inc., a wholly-owned
subsidiary of WPL organized under the laws of the State of
Delaware ("AMW"), are entering into an Agreement and Plan of
Merger, dated as of November 10, 1995, (the "Merger Agreement"),
which provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of OPTION GRANTOR with and
into WPL in accordance with the laws of the States of Wisconsin
and Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION HOLDER in accordance with the laws of the State of
Delaware (the "Interstate Merger", and together with the IES
Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and WPL are entering
into certain stock option agreements dated as of the date hereof,
of which this Agreement is one, whereby the parties hereto grant
each other an option with respect to certain shares of each
other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
5.4(c) of the IES Disclosure Schedule to the Merger Agreement and
by OPTION HOLDER as set forth in Section 6.4(c) of the Interstate
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR
hereby grants OPTION HOLDER an irrevocable option (the "OPTION
GRANTOR Option") to purchase up to that number of shares, subject
to adjustment as provided in Section 12 (the "OPTION GRANTOR
Shares"), of common stock, no par value, of OPTION GRANTOR (the
"OPTION GRANTOR Common Stock") equal to a percentage (the "Option
Shares Percentage"), which Option Shares Percentage is equal to
the OPTION HOLDER's Participation Percentage as defined below in
subsection (e), of 5,861,115 shares of OPTION GRANTOR Common
Stock (being 19.9% of the number of shares of OPTION GRANTOR
Common Stock issued and outstanding as of November 10, 1995, the
"Initial Number") in the manner set forth below, at a price (the
"Exercise Price") per OPTION GRANTOR Share of $26.7125 (which is
equal to the Fair Market Value (as defined below) of a OPTION
GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, $3.50 par value, of OPTION HOLDER ("OPTION
HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of
the Merger Agreement upon or during the continuance of a
Trigger Event (or if, at the expiration of such 180 day
period, the OPTION GRANTOR Option cannot be exercised by
reason of any applicable judgment, decree, order, law or
regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final
and not subject to appeal, but in no event under this clause
(iii) later than May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of Iowa Utilities Board of the issuance
of the OPTION GRANTOR Shares by OPTION GRANTOR and, if
applicable, the acquisition of OPTION GRANTOR Shares by OPTION
HOLDER, and the approval of the Iowa Utilities Board, the
Minnesota Public Utilities Commission and the Illinois Commerce
Commission of the acquisition of the OPTION GRANTOR Shares by
OPTION HOLDER and, if applicable, the acquisition by OPTION
GRANTOR of the OPTION HOLDER Shares constituting the Exercise
Price hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to The quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, subject in the case
of the repurchase of the OPTION GRANTOR Shares pursuant to
Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION GRANTOR does not, and,
subject to compliance with applicable law and the OPTION GRANTOR
Articles with respect to the repurchase of the OPTION GRANTOR
Shares pursuant to Section 8(a), the consummation by OPTION
GRANTOR of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of
time, or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any
such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles
or the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation,
instrument, permit, concession, franchise or
license (any of the foregoing in effect on
the date hereof being referred to as a
"Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a
party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to
OPTION GRANTOR or its properties or assets,
which Violation, in the case of each clauses
(ii) and (iii), could reasonably be expected
to have an OPTION GRANTOR Material Adverse
Effect (except that no representation or
warranty is given concerning any Violation of
a Material Contract with respect to the
repurchase of OPTION GRANTOR Shares pursuant
to Section 8(a));
(f) except as described in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
GRANTOR does not, and the performance of this Agreement by OPTION
GRANTOR will not, require any consent, approval, authorization or
permit of, filing with or notification to, any Governmental
Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 6.4(a) of the
Interstate Disclosure Schedule to the Merger Agreement, OPTION
HOLDER has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the
Interstate Disclosure Schedule to the Merger Agreement, the
execution and delivery of this Agreement by OPTION HOLDER does
not, and the consummation by OPTION HOLDER of the transactions
contemplated hereby will not, violate, conflict with, or result
in the breach of any provision of, or constitute a default (with
or without notice or a lapse of time, or both) under, or result
in any Violation by OPTION HOLDER or any of its Subsidiaries,
pursuant to
(i) any provision of the Articles of
Incorporation or Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any
of its subsidiaries or to which any of them
is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to
OPTION HOLDER or its properties or assets,
which Violation, in the case of each of
clauses (ii) or (iii), would have an OPTION
HOLDER Material Adverse Effect;
(f) except as described in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement or Section
1 or 3 hereof, the execution and delivery of this Agreement by
OPTION HOLDER does not, and the consummation by OPTION HOLDER of
the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, filing with or
notification to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement,
"Market/Offer Price") shall mean, as of any date, the higher
of (I) the price per share offered as of such date pursuant
to any tender or exchange offer or other offer with respect
to a Business Combination involving OPTION GRANTOR as the
Target Party which was made prior to such date and not
terminated or withdrawn as of such date and (II) the Fair
Market Value of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the
"Offer Price" shall be the highest price per share offered
pursuant to a tender or exchange offer or other Business
Combination offer involving OPTION GRANTOR as the Target
Party during the Repurchase Period prior to the delivery by
OPTION HOLDER of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters
in the customary manner,
(ii) to enter into an underwriting agreement in
form and substance customary for transactions of such type
with the Manager and the other underwriters participating in
such offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
Interstate Power Company
1000 Main Street
Dubuque, Iowa 52004-0789
Attention: Wayne H. Stoppelmoor
Chairman
Fax: (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.
Fax: (212) 530-5219
B. If to OPTION GRANTOR, to:
IES Industries Inc.
IES Tower
200 First Street, S.E.
Cedar Rapids, Iowa 52401
Attention: Lee Liu
Fax: (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.
Fax: (212) 858-1500
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
IES INDUSTRIES INC.
By:/s/ Lee Liu
Name: Lee Liu
Title: Chairman of the Board,
President & CEO
INTERSTATE POWER COMPANY
By:/s/ Wayne H. Stoppelmoor
Name: Wayne H. Stoppelmoor
Title: President, Chief
Executive Officer and
Chairman of the Board
EX-2.6
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among Interstate Power Company, a
corporation organized under the laws of the State of Delaware
("OPTION GRANTOR" or the "Company") and WPL Holdings, Inc., a
corporation organized under the laws of the State of Wisconsin
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, IES Industries
Inc., a corporation organized under the laws of the State of Iowa
("IES"), and AMW Acquisition, Inc., a wholly-owned subsidiary of
OPTION HOLDER organized under the laws of the State of Delaware
("AMW"), are entering into an Agreement and Plan of Merger, dated
as of November 10, 1995, (the "Merger Agreement"), which
provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of IES with and into OPTION
HOLDER in accordance with the laws of the States of Wisconsin and
Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION GRANTOR in accordance with the laws of the State of
Delaware (the "Interstate Merger", and together with the IES
Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and IES are entering
into certain stock option agreements dated as of the date hereof,
of which this Agreement is one, whereby the parties hereto grant
each other an option with respect to certain shares of each
other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
6.4(c) of the Interstate Disclosure Schedule to the Merger
Agreement and by OPTION HOLDER as set forth in Section 4.4(c) of
the WPL Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR hereby grants OPTION HOLDER an irrevocable option (the
"OPTION GRANTOR Option") to purchase up to that number of shares,
subject to adjustment as provided in Section 12 (the "OPTION
GRANTOR Shares"), of common stock, par value $3.50 per share, of
OPTION GRANTOR (the "OPTION GRANTOR Common Stock") equal to a
percentage (the "Option Shares Percentage"), which Option Shares
Percentage is equal to the OPTION HOLDER's Participation
Percentage as defined below in subsection (e), of 1,903,293
shares of OPTION GRANTOR Common Stock (being 19.9% of the number
of shares of OPTION GRANTOR Common Stock issued and outstanding
as of November 10, 1995, the "Initial Number") in the manner set
forth below, at a price (the "Exercise Price") per OPTION GRANTOR
Share of $28.9375 (which is equal to the Fair Market Value (as
defined below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, $.01 par value, of OPTION HOLDER ("OPTION
HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of
the Merger Agreement upon or during the continuance of a
Trigger Event (or if, at the expiration of such 180 day
period, the OPTION GRANTOR Option cannot be exercised by
reason of any applicable judgment, decree, order, law or
regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final
and not subject to appeal, but in no event under this clause
(iii) later than May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of Iowa Utilities Board, the Public
Service Commission of Minnesota and the Illinois Commerce
Commission of the issuance of the OPTION GRANTOR Shares by OPTION
GRANTOR and, if applicable, the acquisition of OPTION GRANTOR
Shares by OPTION HOLDER, and the approval of the Public Service
Commission of Wisconsin of the acquisition of the OPTION GRANTOR
Shares by OPTION HOLDER and, if applicable, the acquisition by
OPTION GRANTOR of the OPTION HOLDER Shares constituting the
Exercise Price hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 6.4(a) of the
Interstate Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, subject in
the case of the repurchase of the OPTION GRANTOR Shares pursuant
to Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the
Interstate Disclosure Schedule to the Merger Agreement, the
execution and delivery of this Agreement by OPTION GRANTOR does
not, and, subject to compliance with applicable law and the
OPTION GRANTOR Articles with respect to the repurchase of the
OPTION GRANTOR Shares pursuant to Section 8(a), the consummation
by OPTION GRANTOR of the transactions contemplated hereby will
not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or
a lapse of time, or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right
of termination, cancellation, or acceleration of any obligation
or the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles or
the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation,
instrument, permit, concession, franchise or
license (any of the foregoing in effect on the
date hereof being referred to as a "Material
Contract") of OPTION GRANTOR or its subsidiaries
or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement or Section
1 or 3 hereof, the execution and delivery of this Agreement by
OPTION GRANTOR does not, and the performance of this Agreement by
OPTION GRANTOR will not, require any consent, approval,
authorization or permit of, filing with or notification to, any
Governmental Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 4.4(a) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable
(except as otherwise provided in Section 180.0622(2)(b) of the
WBCL);
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 4.4(b) of the WPL
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated
hereby will not, violate, conflict with, or result in the breach
of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant
to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a
party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets, which
Violation, in the case of each of clauses (ii) or
(iii), would have an OPTION HOLDER Material
Adverse Effect;
(f) except as described in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
HOLDER does not, and the consummation by OPTION HOLDER of the
transactions contemplated hereby will not, require any consent,
approval, authorization or permit of, filing with or notification
to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION
GRANTOR Common Stock as of the date OPTION HOLDER
gives notice of its intent to exercise its rights
under this Section 8 and the Exercise Price,
multiplied by the number of OPTION GRANTOR Shares
purchasable pursuant to the OPTION GRANTOR Option
(or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section
8), but only if the Market/Offer Price is greater
than the Exercise Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of
(I) the price per share offered as of such date
pursuant to any tender or exchange offer or other
offer with respect to a Business Combination
involving OPTION GRANTOR as the Target Party which
was made prior to such date and not terminated or
withdrawn as of such date and (II) the Fair Market
Value of OPTION GRANTOR Common Stock as of such
date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION
GRANTOR Share acquired pursuant to the OPTION
GRANTOR Option, and (b) the difference between the
"Offer Price" (as defined below) and the Exercise
Price, but only if the offer Price is greater that
the Exercise Price, and (II) the number of OPTION
GRANTOR Shares so to be repurchased pursuant to
this Section 8.
(B) For purposes of this clause (ii), the "Offer
Price" shall be the highest price per share offered pursuant to a
tender or exchange offer or other Business Combination offer
involving OPTION GRANTOR as the Target Party during the
Repurchase Period prior to the delivery by OPTION HOLDER of a
notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such
type with the Manager and the other underwriters
participating in such offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration
and sale (including if the Manager deems it
necessary, participating in road-show
presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
WPL Holdings, Inc.
222 West Washington Avenue
Madison, Wisconsin 53703
Attention: Erroll B. Davis, Jr.
Fax: (608) 252-5059
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Attention: Benjamin F. Garmer, III, Esq.
Fax: (414) 297-4900
B. If to OPTION GRANTOR, to:
Interstate Power Company
1000 Main Street
Dubuque, Iowa 52004-0789
Attention: Wayne H. Stoppelmoor
Chairman
Fax: (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.
Fax: (212) 530-5219
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
INTERSTATE POWER COMPANY
By:/s/ Wayne H. Stoppelmoor
Name: Wayne H. Stoppelmoor
Title: President, Chief
Executive Officer and
Chairman of the Board
WPL HOLDINGS, INC.
By:/s/ Erroll B. Davis, Jr.
Name: Erroll B. Davis, Jr.
Title: President and Chief
Executive Officer
EX-2.7
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among Interstate Power Company, a
corporation organized under the laws of the State of Delaware
("OPTION GRANTOR" or the "Company") and IES Industries Inc., a
corporation organized under the laws of the State of Iowa
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, WPL Holdings,
Inc., a corporation organized under the laws of the State of
Wisconsin ("WPL"), and AMW Acquisition, Inc., a wholly-owned
subsidiary of WPL organized under the laws of the State of
Delaware ("AMW"), are entering into an Agreement and Plan of
Merger, dated as of November 10, 1995, (the "Merger Agreement"),
which provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of OPTION HOLDER with and into
WPL in accordance with the laws of the States of Wisconsin and
Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION GRANTOR in accordance with the laws of the State of
Delaware (the "Interstate Merger, and together with the IES
Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and WPL are entering
into certain stock option agreements dated as of the date hereof,
of which this Agreement is one, whereby the parties hereto grant
each other an option with respect to certain shares of each
other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
6.4(c) of the Interstate Disclosure Schedule to the Merger
Agreement and by OPTION HOLDER as set forth in Section 5.4(c) of
the IES Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR hereby grants OPTION HOLDER an irrevocable option (the
"OPTION GRANTOR Option") to purchase up to that number of shares,
subject to adjustment as provided in Section 12 (the "OPTION
GRANTOR Shares"), of common stock, par value $3.50 per share, of
OPTION GRANTOR (the "OPTION GRANTOR Common Stock") equal to a
percentage (the "Option Shares Percentage"), which Option Shares
Percentage is equal to the OPTION HOLDER's Participation
Percentage as defined below in subsection (e), of 1,903,293
shares of OPTION GRANTOR Common Stock (being 19.9% of the number
of shares of OPTION GRANTOR Common Stock issued and outstanding
as of November 10, 1995, the "Initial Number") in the manner set
forth below, at a price (the "Exercise Price") per OPTION GRANTOR
Share of $28.9375 (which is equal to the Fair Market Value (as
defined below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, no par value, of OPTION HOLDER ("OPTION HOLDER
Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of the
Merger Agreement upon or during the continuance of a Trigger
Event (or if, at the expiration of such 180 day period, the
OPTION GRANTOR Option cannot be exercised by reason of any
applicable judgment, decree, order, law or regulation, ten
business days after such impediment to exercise shall have
been removed or shall have become final and not subject to
appeal, but in no event under this clause (iii) later than
May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of the Iowa Utilities Board, the Public
Service Commission of Minnesota and the Illinois Commerce
Commission of the issuance of the OPTION GRANTOR Shares by OPTION
GRANTOR and, if applicable, the acquisition of OPTION GRANTOR
Shares by OPTION HOLDER, and the approval of the Iowa Utilities
Board of the acquisition of the OPTION GRANTOR Shares by OPTION
HOLDER and, if applicable, the acquisition by OPTION GRANTOR of
the OPTION HOLDER Shares constituting the Exercise Price
hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 6.4(a) of the
Interstate Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, subject in
the case of the repurchase of the OPTION GRANTOR Shares pursuant
to Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR 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;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the
Interstate Disclosure Schedule to the Merger Agreement, the
execution and delivery of this Agreement by OPTION GRANTOR does
not, and, subject to compliance with applicable law and the
OPTION GRANTOR Articles with respect to the repurchase of the
OPTION GRANTOR Shares pursuant to Section 8(a), the consummation
by OPTION GRANTOR of the transactions contemplated hereby will
not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or
a lapse of time, or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right
of termination, cancellation, or acceleration of any obligation
or the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles
or the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument,
permit, concession, franchise or license (any of the
foregoing in effect on the date hereof being referred
to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement or Section
1 or 3 hereof, the execution and delivery of this Agreement by
OPTION GRANTOR does not, and the performance of this Agreement by
OPTION GRANTOR will not, require any consent, approval,
authorization or permit of, filing with or notification to, any
Governmental Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective 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;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated
hereby will not, violate, conflict with, or result in the breach
of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant
to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets,
which Violation, in the case of each of clauses (ii) or (iii),
would have an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
HOLDER does not, and the consummation by OPTION HOLDER of the
transactions contemplated hereby will not, require any consent,
approval, authorization or permit of, filing with or notification
to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of (I) the
price per share offered as of such date pursuant to any
tender or exchange offer or other offer with respect to a
Business Combination involving OPTION GRANTOR as the Target
Party which was made prior to such date and not terminated
or withdrawn as of such date and (II) the Fair Market Value
of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the "Offer
Price" shall be the highest price per share offered pursuant
to a tender or exchange offer or other Business Combination
offer involving OPTION GRANTOR as the Target Party during
the Repurchase Period prior to the delivery by OPTION HOLDER
of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with
the Manager and the other underwriters participating in such
offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
IES Industries Inc.
IES Tower
200 First Street S.E.
Cedar Rapids, Iowa 52401
Attention: Lee Liu
Fax: (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.
Fax: (212) 858-1500
B. If to OPTION GRANTOR, to:
Interstate Power Company
1000 Main Street
Dubuque, Iowa 52004-0789
Attention: Wayne H. Stoppelmoor
Chairman
Fax: (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.
Fax: (212) 530-5219
18. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
entirely within such State and without regard to its choice of
law principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the
Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may
be, unless otherwise indicated.
(b) The table of contents and headings contained in
this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
(d) Whenever "or" is used in this Agreement it shall
be construed in the nonexclusive sense.
20. 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.
21. AMENDMENTS; WAIVER. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be
waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for
exercises of certain rights under Sections 2, 7 and 8 shall be
extended (but in no event by more than six months):
(a) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and
(b) to the extent necessary to avoid any liability
under Section 16(b) of the Exchange Act by reason of such
exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
INTERSTATE POWER COMPANY
By:/s/ Wayne H. Stoppelmoor
Name: Wayne H. Stoppelmore
Title: President and Chief
Executive Officer
IES INDUSTRIES INC.
By:/s/ Lee Liu
Name: Lee Liu
Title: Chairman of the Board,
President and Chief
Executive Officer
PRESS RELEASE - November 11, 1995 EX-99
Cedar Rapids, IA, Dubuque, IA and Madison, WI
The joint combination of IES Industries Inc.,
Interstate Power Company and WPL Holdings,
Inc., resulting in the holding company to be
known as Interstate Energy Corporation, will
become the first three-way combination in the
utility industry.
IES Industries Inc., Interstate Power Company and WPL Holdings,
Inc. today announced the signing of a merger agreement providing
for the combination of the three companies. The resulting holding
company will be known as Interstate Energy Corporation.
The strategic combination has been approved by the respective
companies' boards of directors and will result in a corporation
with a market capitalization of approximately $2 billion and assets
of nearly $4 billion. Interstate Energy Corporation will rank 34th
in the nation among utility holding companies, based on 1994
revenues.
The transaction will be structured as a tax-free, stock-for-stock
merger. In the merger, holders of IES Industries Inc. common stock
will receive .98 shares of WPL Holdings common stock for each share
of IES Industries Inc. common stock they own on the effective date
of the merger. Holders of Interstate Power Company common stock
will receive 1.11 shares of WPL Holdings common stock for each
share of Interstate Power Company stock they own, and owners of WPL
Holdings common stock will retain the number of shares of common
stock they own on the effective date. All shares of common stock
are listed on the New York Stock Exchange.
The dividend at the effective date of the merger will be the
dividend then being paid by WPL Holdings. Subsequent dividend
policy will be developed by the board of directors of Interstate
Energy Corporation.
After the combination, Wisconsin Power and Light Company, IES
Utilities, and Interstate Power Company will continue to operate
under those names as the principal subsidiaries of Interstate
Energy Corporation. WPL Holdings will change its name to
Interstate Energy Corporation. IES Diversified and Heartland
Development Corporation will be combined under one entity to manage
the diversified operations at Interstate Energy Corporation.
Initially, facility headquarters will be as follows: IES Utilities
in Cedar Rapids; Interstate Power Company in Dubuque; Wisconsin
Power and Light and Interstate Energy Corporation in Madison.
The combination of these three quality utilities with similar
service territory characteristics will provide substantial
competitive and operational advantages within the region in the
face of utility deregulation. The combination will enable the
operating companies to maintain low rates and a high level of
customer service, and enhance future shareowner value as well.
Estimated savings from the combination are projected to be
approximately $700 million over the next 10 years. The majority of
these savings will come through economies of scale and elimination
of redundancies among the three companies.
The strategic and financial benefits produced by this merger are
compelling. This transaction provides shareowners ownership in a
company with earnings and dividend growth superior to that which
each can achieve on a stand-alone basis. Shareowners will
participate in a balanced, larger company that is better prepared
to face competitive pressures.
After the combination, Lee Liu, presently chairman, president and
chief executive officer of IES Industries, will serve as chairman
of the board of Interstate Energy Corporation. Wayne H.
Stoppelmoor, chairman, president and chief executive officer of
Interstate Power Company, will be the vice chairman. Erroll B.
Davis Jr., chairman, president and chief executive officer of WPL
Holdings will become president and chief executive officer of
Interstate Energy Corporation. Two years after the combination,
Liu and Stoppelmoor will step down and Davis will succeed Liu as
chairman.
The new, combined organization will serve more than 850,000
electric and 360,000 natural gas customers in Iowa, Illinois,
Minnesota and Wisconsin. In addition WPL Holdings, through its
Heartland Development Corporation subsidiaries, has offices in 25
states and two foreign countries. IES Diversified has non-
regulated energy businesses with eight offices in six states and
interests in a utility in New Zealand. The new holding company
will consist of utility and non-utility operations.
"The combination of these companies will create significant long-
term benefits for our employees, customers and shareholders," Liu
said. "Interstate Energy Corporation will be well-positioned to
build on its strengths as a low-cost energy provider and committed
community partner. That strategy should generate opportunities for
our employees and shareholders."
"The electric utility world is changing around us and we must be
ready for the new competition ear. This strategic combination will
ensure our position in a competitive regional market, as well as
offer us opportunities for better customer service and continued
low rates," stated Stoppelmoor.
"I have said for some time that alliances would be a significant
part of WPL Holdings' strategy for the future," commented Davis.
"We intend to provide better customer service at competitive rates,
while increasing shareowner value. This combination will move us
well along toward becoming a regionally and nationally competitive
energy company."
The combination is subject to approval by the shareowners of all
three companies, the utility commissions in Illinois, Iowa,
Minnesota and Wisconsin, the Securities and Exchange Commission,
the Federal Energy Regulatory Commission, and the Nuclear
Regulatory Commission. The merger is also subject to the
expiration of the applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act. It is a condition of closing
that the parties receive an opinion of counsel to the effect that
the exchange of stock qualifies as a tax-free transaction, and
obtain appropriate accountant assurances that the transaction will
be accounted for as a pooling of interests. Preliminary proxy
materials will be filed with the Securities and Exchange Commission
in the near future. Based on optimal times for the required
regulatory approvals, the merger is expected to be completed by
early 1997.
OWNERSHIP INFORMATION
As of the close of business on November 10, 1995, WPL Holdings,
Inc. had 30.8 million shares outstanding, IES Industries Inc. had
29.3 million shares outstanding and Interstate Power Company had
9.6 million shares outstanding. Accordingly, 43.9 percent of the
common equity of Interstate Energy Corporation will be held by
existing WPL Holdings shareholders, 40.9 percent by existing IES
Industries shareholders and 15.2 percent by Interstate Power
Company common shareholders. The preferred stock of Interstate
Power Company will remain outstanding after the transaction.
The Board of Directors of Interstate Energy Corporation will be
composed of six directors to be nominated by WPL Holdings, six
directors to be nominated by IES Industries and three directors to
be nominated by Interstate Power Company.
CORPORATE PROFILES
IES Industries Inc.
IES Industries Inc. was created in July, 1991 by the merger of two
utility holding companies - I.E. Industries Inc. and Iowa Southern
Inc. The subsidiary utility of IES Industries Inc. - IES Utility -
was created following the December 31, 1993, merger of Iowa
Electric Light and Power Co. and Iowa Southern Utilities Co. IES
Industries is a diversified holding company with two wholly-owned
subsidiaries, IES Utilities and IES Diversified. IES Utilities
serves 330,000 electric customers and 173,000 natural gas customers
in more than 500 communities across 23,000 square miles of Iowa.
It also provides wholesale electrical service to 30 municipal
utilities. IES Diversified has interests in energy,
telecommunications and transportation businesses.
IES Utilities has a peak generating capacity of 1875 megawatts.
Fifty percent comes from fossil fuel, 26 percent from the nuclear
powered Duane Arnold Energy Center and 24 percent from purchased
power. The company's combined operating revenues for 1994 were
$785,864,000 with income of $147,933,000 and assets of more than
$1.8 billion. IES Industries is headquartered in Cedar Rapids.
Interstate Power Company
Interstate Power Company is a combined gas and electric utility
which serves approximately 10,000 square miles of territory in
northwest Illinois, northeast Iowa and southern Minnesota. It has
162,000 retail electric and 48,600 natural gas customers in 242
communities. The company also serves 19 wholesale municipal
utilities throughout the region and is headquartered in Dubuque,
Iowa.
Interstate Power has a peak generating capability of approximately
1,300 megawatts. Sixty-two percent of its energy comes from fossil
fuels, with the remainder coming from purchased sources. The
company's 1994 operating revenues were $307,650,612 with income of
$20,666,612 and assets of more than $600 million.
WPL Holdings, Inc.
WPL Holdings, Inc., with headquarters in Madison is the parent
company of Wisconsin Power and Light and Heartland Development
Corporation. Under its utility subsidiary, the company serves
370,000 electric retail and 140,000 natural gas customers in more
than 600 communities over 16,000 square miles of territory in south
central Wisconsin. It also serves 30 municipal and cooperative
utilities with wholesale power. Wisconsin Power and Light has a
generating capacity of 2200 megawatts. Approximately 65 percent of
its energy comes from fossil fuel sources, 14 percent from the
Kewaunee Energy Center nuclear facility, 2 percent from hydro and
about 19 percent from purchased sources.
The company's non-regulated subsidiary, Heartland Development
Corporation has investments in energy, affordable housing and
environmental businesses, with offices in 25 states and in two
foreign countries.
WPL Holdings' combined operating revenues for 1994 was $816,159,000
with income of $62,250,000. The company had combined assets of
$1.6 billion.
MEDIA CONTACTS
Diane Ramsay @ IES Industries Inc. 319-398-7288 (319-375-0651-
pager)
Terry Harrmann @ Interstate Power Company 319-557-2215 (no pager)
Linda Brei @ WPL Holdings, Inc. 608-252-3081 (608-277-7120 - pager)
