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
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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
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(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
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(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
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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
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(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
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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 ▇▇. ▇▇▇
Exhibit 8.15.2 - WPL Employment Contract with ▇▇. ▇▇▇▇▇
Exhibit 8.15.3 - WPL Employment Contract with ▇▇. ▇▇▇▇▇▇▇▇▇▇▇
Exhibit 8.15.4 - WPL Employment Contract with ▇▇. ▇▇▇▇▇
Exhibit 8.15.5 - WPL Employment Contract with ▇▇. ▇▇▇▇▇▇
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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
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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................................................... ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 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..................................... ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ 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
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Knowledge.................................................................. 3
Merger..................................................................... 2
▇▇▇▇▇▇▇.................................................................... 26
▇▇▇▇▇▇..................................................................... 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.......................................................... ▇▇
▇▇▇ ▇▇▇▇▇▇ Stock........................................................... 4
WPL Directors.............................................................. 78
WPL Disclosure Schedule.................................................... 78
WPL Financial Statements................................................... 15
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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
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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,
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(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
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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 ▇▇▇▇▇▇ 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.
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(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).
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(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
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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.
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(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 ▇▇▇▇▇ & Lardner, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, 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
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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.
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(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
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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
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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.
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(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.
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(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
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"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.
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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
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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
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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,
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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.
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(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
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(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,
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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.
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(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,
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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.
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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).
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Section 4.16 Opinion of Financial Advisor. As of the date
hereof, WPL has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & 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.
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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,
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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
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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;
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(ii) subject to obtaining the IES Required Statutory
Approvals and the receipt of the IES Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority
applicable to IES or any of IES Subsidiaries or IES Joint Ventures or
any of their respective properties or assets, or
(iii) subject to obtaining the third-party consents set
forth in Section 5.4(b) of the IES Disclosure Schedule (the "IES
Required Consents"), any material note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which IES or
any of the IES Subsidiaries or IES Joint Ventures is a party or by
which it or any of its properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such violations which, in
the aggregate do not, and insofar as reasonably can be foreseen, would not, have
an IES Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement or the IES/WPL and IES/Interstate Stock Option Agreements by IES or
the consummation by IES of the transactions contemplated hereby or thereby,
except as described in Section 5.4(c) of the IES Disclosure Schedule (the "IES
Required Statutory Approvals", it being understood that references in this
Agreement to "obtaining" such IES Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods expire as
are necessary to avoid a violation of law).
(d) Compliance.
(i) Except as set forth in Section 5.4(d), Section 5.10 or
Section 5.11 of the IES Disclosure Schedule, or as disclosed in the IES
SEC Reports (as hereinafter defined) filed prior to the date hereof,
neither IES nor any of the IES Subsidiaries nor, to the knowledge of
IES, any IES Joint Venture, is in violation of, is under investigation
with respect to any violation of, or has been given notice or been
charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any
Governmental Authority, except for violations which, in the aggregate
do not, and insofar as reasonably can be foreseen, would not, have an
IES Material Adverse Effect.
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(ii) Except as set forth in Section 5.4(d) or in Section
5.11 of the IES Disclosure Schedule, IES and the IES Subsidiaries and
IES Joint Ventures have all Permits necessary to conduct their
businesses as presently conducted, except those the failure of which to
obtain, in the aggregate do not, and insofar as reasonably can be
foreseen, would not, have an IES Material Adverse Effect.
(iii) Except as set forth in Section 5.4(d) of the IES
Disclosure Schedule, each of IES and the IES Subsidiaries and IES Joint
Ventures is not in breach, violation, or default in the performance or
observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a
default under,
(A) its Articles of Incorporation or By-laws, or
(B) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval
or other instrument to which it is a party or by which it is
bound or to which any of its property is subject, except for
breaches, violations or defaults which, in the aggregate do
not, and insofar as reasonably can be foreseen, would not,
have an IES Material Adverse Effect.
Section 5.5 Reports and Financial Statements.
(a) The filings required to be made by IES and the IES
Subsidiaries since January 1, 1992 under the Securities Act, the Exchange Act,
the 1935 Act, the Power Act, the Atomic Energy Act and applicable state laws and
regulations have been filed with the SEC, the FERC, the NRC, the DOE or any
appropriate state public utilities commission, as the case may be, including all
forms, statements, reports, agreements (oral or written) and all documents,
exhibits, amendments and supplements appertaining thereto, and complied, as of
their respective dates, in all material respects with all applicable
requirements of the appropriate statute and the rules and regulations
thereunder.
(b) IES has made available to WPL and Interstate a true and
complete copy of each form, report, schedule, registration statement and
definitive proxy statement filed by each of IES and Utilities with the SEC since
January 1, 1992 (as such documents have since the time of their filing been
amended or supplemented, the "IES SEC Reports") and each other filing described
in Section 5.5(a). As of their respective dates, the IES SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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(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,
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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
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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
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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,
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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
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(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,
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(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
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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.
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇"), 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
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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
▇▇▇▇▇ ▇▇▇▇▇▇ 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
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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,
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(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
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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).
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(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
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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,
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(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.
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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.
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(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
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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
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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
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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
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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.
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(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.
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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
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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,
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(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
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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,
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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,
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singularly or in the aggregate, no party shall, nor shall any party permit any
of its Subsidiaries to, acquire, or publicly propose to acquire, or agree to
acquire, by merger or consolidation with, or by purchase or otherwise, a
substantial equity interest in or a substantial portion of the assets of, any
business or any corporation, partnership, association or other business
organization or division thereof, nor shall any party acquire or agree to
acquire a material amount of assets other than in the ordinary course of
business consistent with past practice.
Section 7.7 Capital Expenditures and Emission Allowances.
Except as set forth in Section 7.7 of the WPL Disclosure Schedule, the IES
Disclosure Schedule or the Interstate Disclosure Schedule, or as required by
law, no party shall, nor shall any party permit any of its Subsidiaries to, (i)
make capital expenditures in excess of $50 million in the case of WPL, $80
million in the case of IES, and $16 million in the case of Interstate over the
amount budgeted by each such party for capital expenditures as set forth in such
Section 7.7 of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, or (ii) enter into written commitments for the
purchase of sulfur dioxide emission allowances as provided for by the Clean Air
Act Amendments of 1990, in excess (singularly or in the aggregate) of $1 million
in the case of WPL, $500,000 in the case of IES, and $250,000 in the case of
Interstate.
Section 7.8 No Dispositions. Except as set forth in Section
7.8 of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, other than dispositions by a party and its
Subsidiaries of assets having a fair market value (singularly or in the
aggregate) of less than $10 million in the case of WPL, $10 million in the case
of IES, and $2 million in the case of Interstate, no party shall, nor shall any
party permit any of its Subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, any of its assets, other than encumbrances or dispositions
in the ordinary course of its business consistent with past practice.
Section 7.9 Indebtedness. Except as contemplated by this
Agreement, no party shall, nor shall any party permit any of its Subsidiaries
to, incur or guarantee any indebtedness (including any debt borrowed or
guaranteed or otherwise assumed including, without limitation, the issuance of
debt securities or warrants or rights to acquire debt) or enter into any "keep
well" or other agreement to maintain any financial condition of another person
or enter into any arrangement having the economic effect of any of the foregoing
other than (i) short-term indebtedness in the ordinary course of business
consistent with past practice (such as the issuance of commercial paper or the
use of existing credit facilities); (ii) long-term indebtedness not aggregating
more than $40 million in the case of WPL, $60 million in the case of IES, and
$20 million in the case of Interstate;
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(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
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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
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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
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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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ("▇▇. ▇▇▇▇▇")
which shall be chaired by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇▇▇▇") 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
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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
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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
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇, 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,
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(ii) IES shall have received an opinion from ▇▇▇▇▇▇, 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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
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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.
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(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
▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇, 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,
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(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
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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).
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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
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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
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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
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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
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informed of the status and details of any such inquiry, offer or proposal, and
shall give the other parties five days' advance notice of any agreement to be
entered into with or any information to be supplied to any person making such
inquiry, offer or proposal. Each party hereto shall immediately cease and cause
to be terminated all existing discussions and negotiations, if any, with any
parties conducted heretofore with respect to any Business Combination Proposal.
(c) As used in this Section 8.12, "Business Combination
Proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving any party to this
Agreement or any of its material Subsidiaries, or any proposal or offer (in each
case, whether or not in writing and whether or not delivered to the shareholders
of a party generally) to acquire in any manner, directly or indirectly, a
substantial equity interest in or a substantial portion of the assets of any
party to this Agreement or any of its material Subsidiaries, other than pursuant
to the transactions contemplated by this Agreement.
(d) Nothing contained herein shall prohibit a party from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) under the Exchange Act with respect to a Business Combination Proposal
made by means of a tender offer.
Section 8.13 Company Board of Directors.
(a) WPL's, IES's and Interstate's respective Boards of
Directors will take such action as may be necessary to cause the number of
directors comprising the full Board of Directors of the Company at the Effective
Time to be fifteen (15) persons. The directors shall be divided into three
classes (hereafter referred to as "Class I," "Class II" and "Class III") of five
directors each. Class I directors shall be appointed for a term expiring at the
first annual meeting of shareholders of the Company following the Effective
Time, Class II directors shall be appointed for a term expiring at the second
annual meeting of shareholders of the Company following the Effective Time, and
Class III directors shall be appointed for a term expiring at the third annual
meeting of shareholders of the Company following the Effective Time, and in each
case until their respective successors have been duly elected and qualified. Of
the directors comprising Class I, two shall be designated by each of IES and WPL
and one shall be designated by Interstate prior to the Effective Time. Of the
directors comprising Class II, two shall be designated by each of IES and WPL,
and one shall be designated by Interstate prior to the Effective Time. Class III
directors shall consist of ▇▇▇ ▇▇▇ ("▇▇. ▇▇▇"), ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ 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
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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 ▇▇▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇▇▇; provided, however, that if ▇▇. ▇▇▇▇▇ 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) ▇▇. ▇▇▇ 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) ▇▇. ▇▇▇▇▇ shall hold the positions of Chief Executive
Officer and President for a period of at least five years from the Effective
Time. When ▇▇. ▇▇▇ no longer serves as Chairman of the Board of Directors, ▇▇.
▇▇▇▇▇ 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
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specified above. Subject to the five-year term specified above, ▇▇. ▇▇▇▇▇ 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, ▇▇. ▇▇▇▇▇
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) ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ 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) ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇. ▇▇▇▇▇") 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) ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") 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 ▇▇. ▇▇▇▇▇▇ ceases to be President of Utilities, ▇▇. ▇▇▇▇▇▇ shall
assume responsibility for the Nonregulated Company, reporting to ▇▇. ▇▇▇▇▇. In
addition, ▇▇. ▇▇▇▇▇▇ shall be elected to the positions of Executive Vice
President and Chief Financial Officer of the Company as of the Effective Time
and shall be entitled to serve in such capacities until his successor is duly
elected or appointed and qualified in accordance with the WBCL and the Restated
Articles of Incorporation and By-laws of the Company (as the same shall be
amended pursuant to Section 8.19).
(f) ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") shall be appointed to
the position of President and Chief Operating Officer of the Nonregulated
Company as of the Effective Time.
(g) Subject to Section 8.14(h), if any of the foregoing
persons is unable or unwilling to hold such offices for the periods set forth
above, his successor shall be selected by the Board of Directors of the Company
in accordance with its By- laws.
(h) For a period of five years following the Effective Time, a
majority vote of the WPL Directors or the successors thereto shall, in addition
to any other vote required by law, be
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required to appoint or elect any person other than ▇▇. ▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇ 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
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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
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or state court preventing consummation of the Merger (including either or both
of the IES Merger and the Interstate Merger) shall have been issued and be
continuing in effect, and the Merger (including either or both of the IES Merger
and the Interstate Merger) and the other transactions contemplated hereby shall
not have been prohibited under any applicable Federal or state law or
regulation.
(c) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act,
and no stop order suspending such effectiveness shall have been issued and
remain in effect.
(d) Listing of Shares. The shares of WPL Common Stock issuable
in the Merger pursuant to Article II shall have been approved for listing on the
NYSE subject only to official notice of issuance.
(e) Statutory Approvals.
(i) The WPL Required Statutory Approvals, the IES Required
Statutory Approvals and the Interstate Required Statutory Approvals
shall have been obtained at or prior to the Effective Time, such
approvals shall have become Final Orders (as hereinafter defined) and
such Final Orders shall not impose terms or conditions which, in the
aggregate have, or insofar as reasonably can be foreseen, would have, a
material adverse effect on the business, assets, financial condition or
results of operations or prospects of the Company or which would be
materially inconsistent with the agreements of the parties contained
herein.
(ii) As used in this Agreement, "Final Order" means action
by the relevant regulatory authority which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, with respect to
which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
(f) Pooling. Each of WPL, IES and Interstate shall have
received a letter of its independent public accountants, dated the Closing Date,
in form and substance reasonably satisfactory, in each case, to WPL, IES and
Interstate, stating that the transactions effected pursuant to this Agreement
will qualify as a pooling of interests transaction pursuant to GAAP and
applicable SEC regulations.
Section 9.2 Further Conditions to Obligation of IES to Effect
the IES Merger. The obligation of IES to effect the IES Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by IES in writing pursuant to Section 10.5:
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(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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 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
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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.
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(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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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
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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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇
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 ▇▇▇▇▇ & 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.
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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;
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(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
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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
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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:
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(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,
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(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
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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
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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
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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
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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
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(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 ▇▇▇▇▇▇▇,
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 ▇▇▇▇▇▇, 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.
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(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.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
President and Chief Executive
Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to IES, to: IES Industries Inc.
IES Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President, General Counsel
and Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Winthrop, Stimson, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Interstate,
to: Interstate Power Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Chairman of the Board
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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.
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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
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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.
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Secretary Title: President and Chief
Executive Officer
IES INDUSTRIES INC.
Attest:
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇ ▇▇▇
------------------------ -----------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇ ▇▇▇
Title: Secretary and General Title: Chairman of the Board,
Counsel President and Chief
Executive Officer
INTERSTATE POWER COMPANY
Attest:
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------- ------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Secretary - Treasurer Title: President and Chief
Executive Officer
AMW ACQUISITION, INC.
Attest:
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------- -------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Secretary Title: President