EXHIBIT B
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10, 1995
(the "Agreement") by and among WPL Holdings, Inc., a corporation organized under
the laws of the State of Wisconsin ("OPTION GRANTOR" or the "Company") and
Interstate Power Company, a corporation organized under the laws of the State of
Delaware ("OPTION HOLDER").
W I T N E S S E T H H A T:
WHEREAS, concurrently with the execution and delivery of this
Agreement, OPTION GRANTOR, OPTION HOLDER, IES Industries Inc., a corporation
organized under the laws of the State of Iowa ("IES"), and AMW Acquisition,
Inc., a wholly-owned subsidiary of OPTION GRANTOR organized under the laws of
the State of Delaware ("AMW"), are entering into an Agreement and Plan of
Merger, dated as of November 10, 1995, (the "Merger Agreement"), which provides,
inter alia, upon the terms and subject to the conditions thereof, for the merger
of IES with and into OPTION GRANTOR in accordance with the laws of the States of
Wisconsin and Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION HOLDER in accordance with the laws of the State of Delaware (the
"Interstate Merger", and together with the IES Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and IES are entering into certain stock
option agreements dated as of the date hereof, of which this Agreement is one,
whereby the parties hereto grant each other an option with respect to certain
shares of each other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness to
enter into the Merger Agreement, OPTION HOLDER has requested that OPTION GRANTOR
agree, and OPTION GRANTOR has so agreed, to grant to OPTION HOLDER an option
with respect to certain shares of OPTION GRANTOR's common stock, on the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into the
Merger Agreement and certain of the Stock Option Agreements, and in
consideration of the representations, warranties, covenants and agreements
contained herein, in the Merger Agreement and in the Stock Option Agreements to
which OPTION GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals and
orders required by OPTION GRANTOR as set forth in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement and by OPTION HOLDER as set forth in
Section 6.4(c) of the Interstate Disclosure Schedule to the Merger Agreement,
OPTION GRANTOR hereby grants OPTION HOLDER an irrevocable option (the "OPTION
GRANTOR Option") to purchase up to that number of shares, subject to adjustment
as provided in Section 12 (the "OPTION GRANTOR Shares"), of common stock, par
value $.01 per share, of OPTION GRANTOR (the "OPTION GRANTOR Common Stock")
equal to a percentage (the "Option Shares Percentage"), which Option Shares
Percentage is equal to the OPTION HOLDER's Participation Percentage as defined
below in subsection (e), of 6,123,944 shares of OPTION GRANTOR Common Stock
(being 19.9% of the number of shares of OPTION GRANTOR Common Stock issued and
outstanding as of November 10, 1995, the "Initial Number") in the manner set
forth below, at a price (the "Exercise Price") per OPTION GRANTOR Share of
$30.675 (which is equal to the Fair Market Value (as defined below) of a OPTION
GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION HOLDER's
option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of any
Governmental Authority required for OPTION GRANTOR to acquire, and
OPTION HOLDER to issue, the OPTION HOLDER Shares (as defined below)
from OPTION HOLDER, in shares of common stock, $3.50 par value, of
OPTION HOLDER ("OPTION HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall the
number of OPTION GRANTOR Shares for which the OPTION GRANTOR Option is
exercisable exceed the product of the Option Shares Percentage and the Initial
Number, subject to adjustment as provided in Section 12.
(d) As used herein, the "Fair Market Value" of any share shall
be the average of the daily closing sales price for such share on the New York
Stock Exchange (the "NYSE") during the ten NYSE trading days prior to the fifth
NYSE trading day preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term "Participation
Percentage" shall have the same meaning as in Section 10.3(f)(i) of the Merger
Agreement, except that the numerator and denominator shall be calculated based
on the number of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted basis had the
Effective Time occurred as of the date on which the Exercise Notice is delivered
under Section 2 hereof or the date on which demand for the Trigger Payment (as
defined herein) is given under Section 5 hereof, as the case may
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be. Other capitalized terms used herein but not defined herein shall have the
meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by OPTION
HOLDER, in whole or in part, at any time or from time to time after the Merger
Agreement becomes terminable by OPTION HOLDER under circumstances which could
entitle OPTION HOLDER to a termination fee under Section 10.3(a) of the Merger
Agreement (provided that the events specified in Section 10.3(a)(ii)(A) of the
Merger Agreement shall have occurred, although the events specified in Section
10.3(a)(ii)(B) thereof need not have occurred), or Section 10.3(b) of the Merger
Agreement (regardless of whether the Merger Agreement is actually terminated or
whether there occurs a closing of any Business Combination involving a Target
Party or a closing by which a Target Party becomes a Subsidiary), any such event
by which the Merger Agreement becomes so terminable by OPTION HOLDER being
referred to herein as a "Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER promptly in
writing of the occurrence of any Trigger Event, it being understood that the
giving of such notice by OPTION GRANTOR shall not be a condition to the right of
OPTION HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to OPTION
GRANTOR written notice (an "Exercise Notice") specifying the total
number of OPTION GRANTOR Shares it wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to OPTION
GRANTOR of the Exercise Notice and the tender of the applicable
aggregate Exercise Price, OPTION HOLDER, to the extent permitted by law
and OPTION GRANTOR's organizational documents, and provided that the
conditions to OPTION GRANTOR's obligation to issue the OPTION GRANTOR
Shares to OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of record of the
OPTION GRANTOR Shares issuable upon such exercise, notwithstanding that
the stock transfer books of OPTION GRANTOR shall then be closed or that
certificates representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and at a time
designated by OPTION HOLDER in an Exercise Notice delivered at least
two business days prior to the date of the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
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(ii) the termination of the Merger Agreement pursuant
to Section 10.1 thereof, other than under circumstances which also
constitute a Trigger Event under this Agreement;
(iii) 180 days following any termination of the
Merger Agreement upon or during the continuance of a Trigger Event (or
if, at the expiration of such 180 day period, the OPTION GRANTOR Option
cannot be exercised by reason of any applicable judgment, decree,
order, law or regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final and not
subject to appeal, but in no event under this clause (iii) later than
May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger Payment
set forth in Section 5 of this Agreement to OPTION HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR Option
may not be exercised if (i) OPTION HOLDER is in material breach of any of its
representations or warranties, or in material breach of any of its covenants or
agreements, contained in this Agreement or in the Merger Agreement, or (ii) a
Trigger Payment has been paid pursuant to Section 5 of this Agreement or demand
therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION GRANTOR to
issue the OPTION GRANTOR Shares to OPTION HOLDER hereunder is subject to the
conditions that
(a) all waiting periods, if any, under the HSR Act applicable
to the issuance and acquisition of the OPTION GRANTOR Shares hereunder shall
have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER Shares
which are issued in payment of the Exercise Price, shall have been approved for
listing on the NYSE subject only to official notice of issuance;
(c) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any federal, state or local
administrative agency or commission or other federal, state or local
Governmental Authority, if any, required in connection with the issuance by
OPTION GRANTOR and the acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without limitation, the
approval of the SEC under Sections 9 and 10 of the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), the approval of the Public
Service Commission of Wisconsin of the issuance of the OPTION GRANTOR Shares by
OPTION GRANTOR and, if applicable, the acquisition of OPTION GRANTOR Shares by
OPTION HOLDER, and the approval of the Iowa Utilities Board, the Minnesota
Public Utilities Commission and the Illinois Commerce Commission of the
acquisition of the OPTION GRANTOR Shares by OPTION HOLDER and, if applicable,
the acquisition by OPTION GRANTOR of the OPTION HOLDER Shares constituting the
Exercise Price hereunder; and
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(d) no preliminary or permanent injunction or other order by
any court of competent jurisdiction prohibiting or otherwise restraining such
issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by OPTION GRANTOR,
in the case of OPTION HOLDER Shares, and by OPTION HOLDER, in the case of OPTION
GRANTOR Shares, in the sole discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or its
designee a single certificate in definitive form representing the number of
OPTION GRANTOR Shares designated by OPTION HOLDER in its Exercise Notice, such
certificate to be registered in the name of OPTION HOLDER and to bear the legend
set forth in Section 13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and being purchased
by
(i) wire transfer of immediately available funds or
certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the number of
OPTION HOLDER Shares being issued by OPTION HOLDER in consideration
thereof, determined in accordance with Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION HOLDER
Shares to OPTION GRANTOR in consideration of OPTION GRANTOR Shares pursuant to
Section 4(b)(ii), the number of OPTION HOLDER Shares to be so issued shall be
equal to the quotient obtained by dividing:
(i) the product of (x) the number of OPTION GRANTOR
Shares with respect to which the OPTION GRANTOR Option is being
exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the Exercise
Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and all
Federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of Section
10.3(e) of the Merger Agreement, if a Trigger Event shall have occurred and any
regulatory approval or
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order required for the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof shall not have
been obtained, OPTION HOLDER shall have the right to receive, and OPTION GRANTOR
shall pay to OPTION HOLDER, an amount (the "Trigger Payment") equal to the
product of
(i) the maximum number of OPTION GRANTOR Shares that
would have been subject to purchase by OPTION HOLDER upon exercise of
the OPTION GRANTOR Option pursuant to Sections 1 and 2 hereof if all
such regulatory approvals or orders had been obtained, and
(ii) the difference between (A) the Market/Offer
Price (as defined herein), determined as of the date on which notice of
demand for the Trigger Payment is given by OPTION HOLDER, and (B) the
Exercise Price (but only if such Market/Offer Price is higher than such
Exercise Price).
Demand for the Trigger Payment shall be given by notice in accordance with the
provisions of Section 17 hereof. The Trigger Payment shall be paid to OPTION
HOLDER by OPTION GRANTOR on the Payment Date (as defined herein), by wire
transfer of immediately available funds to an account to be designated in
writing by OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5, "Payment
Date" means the date on which termination fees are required to be paid by OPTION
GRANTOR to OPTION HOLDER under Sections 10.3(a) or 10.3(b), as the case may be,
of the Merger Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in material breach of
any of its representations or warranties, or in material breach of any of its
covenants or agreements, contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR. OPTION
GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 4.4(a) of the WPL
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, subject in the case of the repurchase of the OPTION
GRANTOR Shares pursuant to Section 8(a) to applicable law and the provisions of
OPTION GRANTOR's Articles of Incorporation, as amended (the "OPTION GRANTOR
Articles");
(b) this Agreement has been duly and validly executed and
delivered by OPTION GRANTOR, and, assuming the due authorization, execution and
delivery hereof by OPTION HOLDER and the receipt of all required regulatory
approvals, constitutes a valid and binding obligation of OPTION GRANTOR,
enforceable against OPTION GRANTOR in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency,
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reorganization or other similar laws affecting the enforcement of creditors'
rights generally, and except that the availability of equitable remedies,
including specific performance, may be subject to the discretion of any court
before which any proceeding therefor may be brought;
(c) OPTION GRANTOR has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue, upon exercise of
the OPTION GRANTOR Option, and at all times from the date hereof through the
expiration of the OPTION GRANTOR Option will have reserved, the Initial Number
of authorized and unissued OPTION GRANTOR Shares, such amount being subject to
adjustment as provided in Section 12, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable (except as otherwise
provided in Section 180.0622(2)(b) of the WBCL);
(d) upon delivery of the OPTION GRANTOR Shares to OPTION
HOLDER upon the exercise of the OPTION GRANTOR Option, OPTION HOLDER will
acquire the OPTION GRANTOR Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 4.4(b) of the WPL
Disclosure Schedule to the Merger Agreement, the execution and delivery of this
Agreement by OPTION GRANTOR does not, and, subject to compliance with applicable
law and the OPTION GRANTOR Articles with respect to the repurchase of the OPTION
GRANTOR Shares pursuant to Section 8(a), the consummation by OPTION GRANTOR of
the transactions contemplated hereby will not, violate, conflict with, or result
in a breach of any provision of, or constitute a default (with or without notice
or a lapse of time, or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination,
cancellation, or acceleration of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security interest or other
encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries, pursuant to
(i) any provision of the OPTION GRANTOR Articles or
the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise or
license (any of the foregoing in effect on the date hereof being
referred to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION GRANTOR or its
properties or assets,
which Violation, in the case of each clauses (ii) and (iii), could reasonably be
expected to have an OPTION GRANTOR Material Adverse Effect (except that no
representation or
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warranty is given concerning any Violation of a Material Contract with respect
to the repurchase of OPTION GRANTOR Shares pursuant to Section 8(a));
(f) except as described in Section 4.4(c) of the WPL
Disclosure Schedule to the Merger Agreement or Section 1 or 3 hereof, the
execution and delivery of this Agreement by OPTION GRANTOR does not, and the
performance of this Agreement by OPTION GRANTOR will not, require any consent,
approval, authorization or permit of, filing with or notification to, any
Governmental Authority;
(g) none of OPTION GRANTOR, any of its affiliates or anyone
acting on its or their behalf, has issued, sold or offered any security of
OPTION GRANTOR to any person under circumstances that would cause the issuance
and sale of OPTION GRANTOR Shares, as contemplated by this Agreement, to be
subject to the registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties of OPTION
HOLDER contained in Section 7(g) are true and correct, the issuance, sale and
delivery of the OPTION GRANTOR Shares hereunder would be exempt from the
registration and prospectus delivery requirements of the Securities Act, as in
effect on the date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR Shares hereunder
not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for investment
purposes only, and will not be acquired by OPTION GRANTOR with a view to the
public distribution thereof in violation of any applicable provision of the
Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER. OPTION
HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 6.4(a) of the Interstate
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder;
(b) this Agreement has been duly and validly executed and
delivered by OPTION HOLDER and, assuming the due authorization, execution and
delivery hereof by OPTION GRANTOR and the receipt of all required regulatory
approvals, constitutes a valid and binding obligation of OPTION HOLDER,
enforceable against OPTION HOLDER in accordance with its respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors' rights generally,
and except that the availability of equitable remedies, including specific
performance, may be subject to the discretion of any court before which any
proceeding may be brought;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant hereto, OPTION
HOLDER will have taken all necessary corporate action to authorize for issuance
and to permit it to issue such OPTION HOLDER Shares, all of which, upon their
issuance and delivery in accordance with
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the terms of this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to OPTION
GRANTOR in consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION GRANTOR will acquire the OPTION HOLDER Shares free and clear of
all claims, liens, charges, encumbrances and security interests of any nature
whatsoever;
(e) except as described in Section 6.4(b) of the Interstate
Disclosure Schedule to the Merger Agreement, the execution and delivery of this
Agreement by OPTION HOLDER does not, and the consummation by OPTION HOLDER of
the transactions contemplated hereby will not, violate, conflict with, or result
in the breach of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any Violation by OPTION
HOLDER or any of its Subsidiaries, pursuant to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION HOLDER or its
properties or assets,
which Violation, in the case of each of clauses (ii) or (iii), would have an
OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 6.4(c) of the Interstate
Disclosure Schedule to the Merger Agreement or Section 1 or 3 hereof, the
execution and delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated hereby will not,
require any consent, approval, authorization or permit of, filing with or
notification to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise of the
OPTION GRANTOR Option will be acquired for OPTION HOLDER's own account, for
investment purposes only and will not be, and the OPTION GRANTOR Option is not
being, acquired by OPTION HOLDER with a view to the public distribution thereof,
in violation of any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION HOLDER by
written notice (x) at any time during which the OPTION GRANTOR Option is
exercisable pursuant to Section 2 (the "Repurchase Period"), OPTION GRANTOR (or
any successor entity thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material Contracts, repurchase
from OPTION HOLDER
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all or any portion of the OPTION GRANTOR Option, at the price set forth in
subparagraph (i) below, or, (y) at any time prior to May 10, 1997 (provided that
such date shall be extended to May 10, 1998 under the circumstances where the
date after which either party may terminate the Merger Agreement pursuant to
Section 10.1(b) of the Merger Agreement has been extended to May 10, 1998),
OPTION GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION GRANTOR's
Material Contracts, repurchase from OPTION HOLDER all or any portion of the
OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to the OPTION GRANTOR
Option, at the price set forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer Price"
(as defined below) for shares of OPTION GRANTOR Common Stock as of the
date OPTION HOLDER gives notice of its intent to exercise its rights
under this Section 8 and the Exercise Price, multiplied by the number
of OPTION GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION HOLDER is
exercising its rights under this Section 8), but only if the
Market/Offer Price is greater than the Exercise Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of (I) the price per
share offered as of such date pursuant to any tender or exchange offer
or other offer with respect to a Business Combination involving OPTION
GRANTOR as the Target Party which was made prior to such date and not
terminated or withdrawn as of such date and (II) the Fair Market Value
of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the Exercise
Price paid by OPTION HOLDER per OPTION GRANTOR Share acquired pursuant
to the OPTION GRANTOR Option, and (b) the difference between the "Offer
Price" (as defined below) and the Exercise Price, but only if the offer
Price is greater that the Exercise Price, and (II) the number of OPTION
GRANTOR Shares so to be repurchased pursuant to this Section 8.
(B) For purposes of this clause (ii), the "Offer
Price" shall be the highest price per share offered pursuant to a
tender or exchange offer or other Business Combination offer involving
OPTION GRANTOR as the Target Party during the Repurchase Period prior
to the delivery by OPTION HOLDER of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION HOLDER shall
have previously elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and delivery of OPTION
HOLDER Shares, then OPTION GRANTOR shall, if so requested by OPTION HOLDER, in
fulfillment of its obligation pursuant to Section 8(a)(y) (that is, with respect
to the Exercise Price only and without limitation to its obligation to pay
additional consideration under clause (b) of Section 8(a)(ii)(A)(I)), redeliver
the certificates for such OPTION HOLDER Shares to OPTION HOLDER, free and clear
of all liens, claims, charges and encumbrances of any kind or nature whatsoever;
provided, however, that if at any time less than all of the
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OPTION GRANTOR Shares so purchased by OPTION HOLDER pursuant to the OPTION
GRANTOR Option are to be repurchased by OPTION GRANTOR pursuant to Section
8(a)(y), then (i) OPTION GRANTOR shall be obligated to redeliver to OPTION
HOLDER the same proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to repurchase bears to the
number of OPTION GRANTOR Shares acquired by OPTION HOLDER upon exercise of the
OPTION GRANTOR Option and (ii) OPTION HOLDER shall issue to OPTION GRANTOR new
certificates representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the extent that
excess OPTION HOLDER Shares are included in the certificates redelivered to
OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS OR
SHARES. In the event OPTION HOLDER exercises its rights under this Section 8,
OPTION GRANTOR shall, within ten business days thereafter, pay the required
amount to OPTION HOLDER in immediately available funds and OPTION HOLDER shall
surrender to OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by OPTION HOLDER
pursuant hereto, and OPTION HOLDER shall warrant that it owns the OPTION GRANTOR
Option or such shares and that the OPTION GRANTOR Option or such shares are then
free and clear of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has elected to
purchase OPTION GRANTOR Shares pursuant to the exercise of the OPTION GRANTOR
Option by the issuance and delivery of OPTION HOLDER Shares, notwithstanding
that OPTION HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this Section 8,
OPTION HOLDER may require, at any time or from time to time prior to May 10,
1997 (provided that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may terminate the Merger
Agreement pursuant to Section 10.1(b) of the Merger Agreement has been extended
to May 10, 1998), OPTION GRANTOR to sell to OPTION HOLDER any such OPTION HOLDER
Shares at the price attributed to such OPTION HOLDER Shares pursuant to Section
4 plus interest at the rate of 8.75% per annum on such amount from the Closing
Date relating to the exchange of such OPTION HOLDER Shares pursuant to Section 4
to the Closing Date under this Section 8(d) less any dividends on such OPTION
HOLDER Shares paid during such period or declared and payable to stockholders of
record on a date during such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S OPTION. In the
event the repurchase price specified in Section 8(a) would subject the purchase
of the OPTION GRANTOR Option or the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option to a vote of the shareholders of
OPTION GRANTOR pursuant to applicable law or the OPTION GRANTOR Articles, then
OPTION HOLDER may, at its election, reduce the repurchase price to an amount
which would permit such repurchase without the necessity for such a shareholder
vote.
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9. VOTING OF SHARES. Following the date hereof and prior to
the fifth anniversary of the date hereof (the "Expiration Date"), each party
shall vote any shares of capital stock of the other party acquired by such party
pursuant to this Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), by such party on each matter submitted to a
vote of shareholders of such other party for and against such matter in the same
proportion as the vote of all other shareholders of such other party are voted
(whether by proxy or otherwise) for and against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration Date,
neither party shall, directly or indirectly, by operation of law or otherwise,
sell, assign, pledge, or otherwise dispose of or transfer any Restricted Shares
beneficially owned by such party, other than (i) pursuant to Section 8, or (ii)
in accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the Merger
Agreement, a party shall be permitted to sell any Restricted Shares beneficially
owned by it if such sale is made pursuant to a tender or exchange offer that has
been approved or recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a majority of the
members of the Board of Directors of such other party, which majority shall
include a majority of directors who were directors prior to the announcement of
such tender or exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement, either
party hereto that owns Restricted Shares (a "Designated Holder") may by written
notice (the "Registration Notice") to the other party (the "Registrant") request
the Registrant to register under the Securities Act all or any part of the
Restricted Shares beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten public
offering, in which the Designated Holder and the underwriters shall effect as
wide a distribution of such Registrable Securities as is reasonably practicable
and shall use their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates from purchasing
through such offering Restricted Shares representing more than 1% of the
outstanding shares of common stock of the Registrant on a fully diluted basis (a
"Permitted Offering").
(b) The Registration Notice shall include a certificate
executed by the Designated Holder and its proposed managing underwriter, which
underwriter shall be an investment banking firm of nationally recognized
standing (the "Manager"), stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
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(ii) the manager in good faith believes that, based
on the then-prevailing market conditions, it will be able to sell the
Registrable Securities at a per share price equal to at least 80% of
the then Fair Market Value of such shares.
(c) The Registrant (and/or any person designated by the
Registrant) shall thereupon have the option exercisable by written notice
delivered to the Designated Holder within ten business days after the receipt of
the Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price (the "Option
Price") equal to the product of (i) the number of Registrable Securities to be
so purchased by the Registrant and (ii) the then Fair Market Value of such
shares.
(d) Any purchase of Registrable Securities by the Registrant
(or its designee) under Section 11(c) shall take place at a closing to be held
at the principal executive offices of the Registrant or at the offices of its
counsel at any reasonable date and time designated by the Registrant and/or such
designee in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall be made by
delivery at the time of such closing in immediately available funds.
(e) If the Registrant does not elect to exercise its option
pursuant to this Section 11 with respect to all Registrable Securities, it shall
use its best efforts to effect, as promptly as practicable, the registration
under the Securities Act of the unpurchased Registrable Securities proposed to
be so sold; provided, however, that
(i) neither party shall be entitled to demand more
than an aggregate of two effective registration statements hereunder,
and
(ii) the Registrant will not be required to file any
such registration statement during any period of time (not to exceed 40
days after such request in the case of clause (A) below or 90 days in
the case of clauses (B) and (C) below) when
(A) the Registrant is in possession of material
non-public information which it reasonably believes would be
detrimental to be disclosed at such time and, in the opinion
of counsel to the Registrant, such information would be
required to be disclosed if a registration statement were
filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements for any
period in such registration statement and such financial
statements are not yet available for inclusion in such
registration statement; or
(C) the Registrant determines, in its reasonable
judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving
the Registrant or any of its affiliates.
(f) The Registrant shall use its reasonable best efforts to
cause any Registrable Securities registered pursuant to this Section 11 to be
qualified for sale under the securities
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or Blue Sky laws of such jurisdictions as the Designated Holder may reasonably
request and shall continue such registration or qualification in effect in such
jurisdiction; provided, however, that the Registrant shall not be required to
qualify to do business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section 11 are
subject to the condition that the Designated Holder shall provide the Registrant
with such information with respect to such holder's Registrable Securities, the
plans for the distribution thereof, and such other information with respect to
such holder as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such registration statement all
material facts required to be disclosed with respect to a registration
thereunder.
(h) A registration effected under this Section 11 shall be
effected at the Registrant's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to the Designated Holder,
and the Registrant shall provide to the underwriters such documentation
(including certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public offerings as
such underwriters may reasonably require.
(i) In connection with any registration effected
under this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the Manager
and the other underwriters participating in such offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale (including if
the Manager deems it necessary, participating in road-show
presentations).
(j) The Registrant shall be entitled to include (at its
expense) additional shares of its common stock in a registration effected
pursuant to this Section 11 only if and to the extent the Manager determines
that such inclusion will not adversely affect the prospects for success of such
offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without
limitation to any restriction on OPTION GRANTOR contained in this Agreement or
in the Merger Agreement, in the event of any change in OPTION GRANTOR Common
Stock by reason of stock dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like, the type and
number of shares or securities subject to the OPTION GRANTOR Option, and the
purchase price per share provided in Section 1, shall be adjusted appropriately
to restore to OPTION HOLDER its rights hereunder, including the right to
purchase from OPTION GRANTOR (or its successors) shares of OPTION GRANTOR Common
Stock (or such other shares or securities into which
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OPTION GRANTOR Common Stock has been so changed) representing the Option Shares
Percentage of the Initial Number of shares of OPTION GRANTOR Common Stock for
the aggregate Exercise Price calculated as of the date of this Agreement as
provided in Section 1.
13. RESTRICTIVE LEGENDS. Each certificate representing OPTION
GRANTOR Shares issued to OPTION HOLDER hereunder, and OPTION HOLDER Shares, if
any, delivered to OPTION GRANTOR at a Closing, shall include a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR
IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT, DATED AS
OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER
UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of the
Securities Act and state securities or Blue Sky laws in the above
legend shall be removed by delivery of substitute certificate(s)
without such reference if OPTION HOLDER or OPTION GRANTOR, as the case
may be, shall have delivered to the other party a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such legend is not
required for purposes of the Securities Act or such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of
such reference; and
(iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both
satisfied.
In addition, such certificates shall bear any other legend as may be required by
law. Certificates representing shares sold in a registered public offering
pursuant to Section 11 shall not be required to bear the legend set forth in
this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
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(b) Except as expressly provided for in this Agreement,
neither this Agreement nor the rights or obligations of either party hereto are
assignable, except by operation of law, or with the written consent of the other
party.
(c) Nothing contained in this Agreement, express or implied,
is intended to confer upon any person other than the parties hereto and their
respective permitted assigns any rights or remedies of any nature whatsoever by
reason of this Agreement.
(d) Any Restricted Shares sold by a party in compliance with
the provisions of Section 11 shall, upon consummation of such sale, be free of
the restrictions imposed with respect to such shares by this Agreement, unless
and until such party shall repurchase or otherwise become the beneficial owner
of such shares, and any transferee of such shares shall not be entitled to the
registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable harm would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specified terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
(b) In the event any court or other competent authority holds
any provisions of this Agreement to be null, void or unenforceable, the parties
hereto shall negotiate in good faith the execution and delivery of an amendment
to this Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such court or
regulatory agency determines that OPTION HOLDER is not permitted to acquire, or
OPTION GRANTOR is not permitted to repurchase pursuant to Section 8, the full
number of shares of OPTION GRANTOR Common Stock provided in Section 1 hereof (as
the same may be adjusted), it is the express intention of OPTION GRANTOR to
allow OPTION HOLDER to acquire or to require OPTION GRANTOR to repurchase such
lesser number of shares as may be permissible without any amendment or
modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action inconsistent
herewith, or not take any action required herein, the other party shall not be
entitled to specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for breach hereof or
of any other provision of this Agreement or part hereof as the result of such
holding or order.
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17. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered personally, or
(b) if sent by overnight courier service (receipt confirmed in writing), or (c)
if delivered by facsimile transmission (with receipt confirmed), or (d) five
days after being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses (or at such
other address for a party as shall be specified by like notice):
A. If to OPTION HOLDER, to:
Interstate Power Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Chairman
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
B. If to OPTION GRANTOR, to:
WPL Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State and without
regard to its choice of law principles or to any requirement as to jurisdiction
or service of process contained in Section 2708 of Title 6 of the Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to Articles,
Sections or Exhibits, such reference shall be to an Article, Section or Exhibit
of this Agreement, as the case may be, unless otherwise indicated.
(b) The table of contents and headings contained in this
Agreement are for reference purposes and shall not affect in any way the meaning
or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(d) Whenever "or" is used in this Agreement it shall be
construed in the nonexclusive sense.
20. COUNTERPARTS; EFFECT. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
21. AMENDMENTS; WAIVER. This Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or, in the
case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
22. EXTENSION OF TIME PERIODS. The time periods for exercises
of certain rights under Sections 2, 7 and 8 shall be extended (but in no event
by more than six months):
(a) to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and for the expiration of all statutory waiting
periods; and
(b) to the extent necessary to avoid any liability under
Section 16(b) of the Exchange Act by reason of such exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
- 18 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
WPL HOLDINGS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President and Chief
Executive Officer
INTERSTATE POWER COMPANY
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President, Chief
Executive Officer and
Chairman of the Board
- 19 -