OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10, 1995 (the
"Agreement") by and among Interstate Power Company, a corporation
organized under the laws of the State of Delaware ("OPTION GRANTOR" or the
"Company") and IES Industries Inc., a corporation organized under the laws
of the State of Iowa ("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery of this
Agreement, OPTION GRANTOR, OPTION HOLDER, WPL Holdings, Inc., a
corporation organized under the laws of the State of Wisconsin ("WPL"),
and AMW Acquisition, Inc., a wholly-owned subsidiary of WPL organized
under the laws of the State of Delaware ("AMW"), are entering into an
Agreement and Plan of Merger, dated as of November 10, 1995, (the "Merger
Agreement"), which provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of OPTION HOLDER with and into WPL in
accordance with the laws of the States of Wisconsin and Iowa (the "IES
Merger"), and the merger of AMW with and into OPTION GRANTOR in accordance
with the laws of the State of Delaware (the "Interstate Merger, and
together with the IES Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and WPL are entering into certain
stock option agreements dated as of the date hereof, of which this
Agreement is one, whereby the parties hereto grant each other an option
with respect to certain shares of each other's common stock on the terms
and subject to the conditions set forth therein (the "Stock Option
Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness to enter
into the Merger Agreement, OPTION HOLDER has requested that OPTION GRANTOR
agree, and OPTION GRANTOR has so agreed, to grant to OPTION HOLDER an
option with respect to certain shares of OPTION GRANTOR's common stock, on
the terms and subject to the conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into the Merger
Agreement and certain of the Stock Option Agreements, and in consideration
of the representations, warranties, covenants and agreements contained
herein, in the Merger Agreement and in the Stock Option Agreements to
which OPTION GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals and
orders required by OPTION GRANTOR as set forth in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement and by OPTION
HOLDER as set forth in Section 5.4(c) of the IES Disclosure Schedule to
the Merger Agreement, OPTION GRANTOR hereby grants OPTION HOLDER an
irrevocable option (the "OPTION GRANTOR Option") to purchase up to that
number of shares, subject to adjustment as provided in Section 12 (the
"OPTION GRANTOR Shares"), of common stock, par value $3.50 per share, of
OPTION GRANTOR (the "OPTION GRANTOR Common Stock") equal to a percentage
(the "Option Shares Percentage"), which Option Shares Percentage is equal
to the OPTION HOLDER's Participation Percentage as defined below in
subsection (e), of 1,903,293 shares of OPTION GRANTOR Common Stock (being
19.9% of the number of shares of OPTION GRANTOR Common Stock issued and
outstanding as of November 10, 1995, the "Initial Number") in the manner
set forth below, at a price (the "Exercise Price") per OPTION GRANTOR
Share of $28.9375 (which is equal to the Fair Market Value (as defined
below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION HOLDER's
option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of any
Governmental Authority required for OPTION GRANTOR to acquire, and
OPTION HOLDER to issue, the OPTION HOLDER Shares (as defined below)
from OPTION HOLDER, in shares of common stock, no par value, of
OPTION HOLDER ("OPTION HOLDER Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall the number
of OPTION GRANTOR Shares for which the OPTION GRANTOR Option is
exercisable exceed the product of the Option Shares Percentage and the
Initial Number, subject to adjustment as provided in Section 12.
(d) As used herein, the "Fair Market Value" of any share shall
be the average of the daily closing sales price for such share on the New
York Stock Exchange (the "NYSE") during the ten NYSE trading days prior to
the fifth NYSE trading day preceding the date such Fair Market Value is to
be determined.
(e) For purposes of this Agreement the term "Participation
Percentage" shall have the same meaning as in Section 10.3(f)(i) of the
Merger Agreement, except that the numerator and denominator shall be
calculated based on the number of shares of WPL Common Stock which would
be issuable (or, in the case of WPL, retained by its shareholders) on a
fully diluted basis had the Effective Time occurred as of the date on
which the Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is given under
Section 5 hereof, as the case may be. Other capitalized terms used herein
but not defined herein shall have the meanings set forth in the Merger
Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by OPTION
HOLDER, in whole or in part, at any time or from time to time after the
Merger Agreement becomes terminable by OPTION HOLDER under circumstances
which could entitle OPTION HOLDER to a termination fee under Section
10.3(a) of the Merger Agreement (provided that the events specified in
Section 10.3(a)(ii)(A) of the Merger Agreement shall have occurred,
although the events specified in Section 10.3(a)(ii)(B) thereof need not
have occurred), or Section 10.3(b) of the Merger Agreement (regardless of
whether the Merger Agreement is actually terminated or whether there
occurs a closing of any Business Combination involving a Target Party or a
closing by which a Target Party becomes a Subsidiary), any such event by
which the Merger Agreement becomes so terminable by OPTION HOLDER being
referred to herein as a "Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER promptly in
writing of the occurrence of any Trigger Event, it being understood
that the giving of such notice by OPTION GRANTOR shall not be a
condition to the right of OPTION HOLDER to exercise the OPTION
GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise the
OPTION GRANTOR Option, OPTION HOLDER shall deliver to OPTION GRANTOR
written notice (an "Exercise Notice") specifying the total number of
OPTION GRANTOR Shares it wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to OPTION
GRANTOR of the Exercise Notice and the tender of the applicable
aggregate Exercise Price, OPTION HOLDER, to the extent permitted by
law and OPTION GRANTOR's organizational documents, and provided that
the conditions to OPTION GRANTOR's obligation to issue the OPTION
GRANTOR Shares to OPTION HOLDER hereunder set forth in Section 3 have
been satisfied or waived, shall be deemed to be the holder of record
of the OPTION GRANTOR Shares issuable upon such exercise,
notwithstanding that the stock transfer books of OPTION GRANTOR shall
then be closed or that certificates representing such OPTION GRANTOR
Shares shall not then be actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR Shares (a
"Closing") shall occur at a place, on a date, and at a time
designated by OPTION HOLDER in an Exercise Notice delivered at least
two business days prior to the date of the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the earliest
to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement pursuant to
Section 10.1 thereof, other than under circumstances which also
constitute a Trigger Event under this Agreement;
(iii) 180 days following any termination of the Merger
Agreement upon or during the continuance of a Trigger Event (or if,
at the expiration of such 180 day period, the OPTION GRANTOR Option
cannot be exercised by reason of any applicable judgment, decree,
order, law or regulation, ten business days after such impediment to
exercise shall have been removed or shall have become final and not
subject to appeal, but in no event under this clause (iii) later than
May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger Payment set
forth in Section 5 of this Agreement to OPTION HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR Option
may not be exercised if (i) OPTION HOLDER is in material breach of any of
its representations or warranties, or in material breach of any of its
covenants or agreements, contained in this Agreement or in the Merger
Agreement, or (ii) a Trigger Payment has been paid pursuant to Section 5
of this Agreement or demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION GRANTOR to
issue the OPTION GRANTOR Shares to OPTION HOLDER hereunder is subject to
the conditions that
(a) all waiting periods, if any, under the HSR Act applicable
to the issuance and acquisition of the OPTION GRANTOR Shares hereunder
shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER Shares
which are issued in payment of the Exercise Price, shall have been
approved for listing on the NYSE subject only to official notice of
issuance;
(c) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any federal, state or local
administrative agency or commission or other federal, state or local
Governmental Authority, if any, required in connection with the issuance
by OPTION GRANTOR and the acquisition by OPTION HOLDER of the OPTION
GRANTOR Shares hereunder shall have been obtained or made, including,
without limitation, the approval of the SEC under Sections 9 and 10 of the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"),
the approval of the Iowa Utilities Board, the Public Service Commission of
Minnesota and the Illinois Commerce Commission of the issuance of the
OPTION GRANTOR Shares by OPTION GRANTOR and, if applicable, the
acquisition of OPTION GRANTOR Shares by OPTION HOLDER, and the approval of
the Iowa Utilities Board of the acquisition of the OPTION GRANTOR Shares
by OPTION HOLDER and, if applicable, the acquisition by OPTION GRANTOR of
the OPTION HOLDER Shares constituting the Exercise Price hereunder; and
(d) no preliminary or permanent injunction or other order by
any court of competent jurisdiction prohibiting or otherwise restraining
such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by OPTION
GRANTOR, in the case of OPTION HOLDER Shares, and by OPTION HOLDER, in the
case of OPTION GRANTOR Shares, in the sole discretion of the waiving
party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or its
designee a single certificate in definitive form representing the number
of OPTION GRANTOR Shares designated by OPTION HOLDER in its Exercise
Notice, such certificate to be registered in the name of OPTION HOLDER and
to bear the legend set forth in Section 13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the aggregate
price for the OPTION GRANTOR Shares so designated and being purchased by
(i) wire transfer of immediately available funds or
certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii), delivery
of a certificate or certificates representing the number of OPTION
HOLDER Shares being issued by OPTION HOLDER in consideration thereof,
determined in accordance with Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION HOLDER Shares
to OPTION GRANTOR in consideration of OPTION GRANTOR Shares pursuant to
Section 4(b)(ii), the number of OPTION HOLDER Shares to be so issued shall
be equal to the quotient obtained by dividing:
(i) the product of (x) the number of OPTION GRANTOR Shares
with respect to which the OPTION GRANTOR Option is being exercised
and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER Shares as
of the date immediately preceding the date the Exercise Notice is
delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and all
Federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates
under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of Section
10.3(e) of the Merger Agreement, if a Trigger Event shall have occurred
and any regulatory approval or order required for the issuance by OPTION
GRANTOR, or the acquisition by OPTION HOLDER, of the OPTION GRANTOR Option
pursuant to Section 1 hereof shall not have been obtained, OPTION HOLDER
shall have the right to receive, and OPTION GRANTOR shall pay to OPTION
HOLDER, an amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would have been
subject to purchase by OPTION HOLDER upon exercise of the OPTION
GRANTOR Option pursuant to Sections 1 and 2 hereof if all such
regulatory approvals or orders had been obtained, and
(ii) the difference between (A) the Market/Offer Price (as defined
herein), determined as of the date on which notice of demand for the
Trigger Payment is given by OPTION HOLDER, and (B) the Exercise Price
(but only if such Market/Offer Price is higher than such Exercise
Price).
Demand for the Trigger Payment shall be given by notice in accordance with
the provisions of Section 17 hereof. The Trigger Payment shall be paid to
OPTION HOLDER by OPTION GRANTOR on the Payment Date (as defined herein),
by wire transfer of immediately available funds to an account to be
designated in writing by OPTION HOLDER not less than two business days
before the Payment Date.
(b) Payment Date. For purposes of this Section 5, "Payment
Date" means the date on which termination fees are required to be paid by
OPTION GRANTOR to OPTION HOLDER under Sections 10.3(a) or 10.3(b), as the
case may be, of the Merger Agreement as a result of the occurrence of the
Trigger Event referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in material
breach of any of its representations or warranties, or in material breach
of any of its covenants or agreements, contained in this Agreement or in
the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR. OPTION
GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 6.4(a) of the Interstate
Disclosure Schedule to the Merger Agreement, OPTION GRANTOR has the
corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder, subject in the case of the repurchase of
the OPTION GRANTOR Shares pursuant to Section 8(a) to applicable law and
the provisions of OPTION GRANTOR's Articles of Incorporation, as amended
(the "OPTION GRANTOR Articles");
(b) this Agreement has been duly and validly executed and
delivered by OPTION GRANTOR, and, assuming the due authorization,
execution and delivery hereof by OPTION HOLDER and the receipt of all
required regulatory approvals, constitutes a valid and binding obligation
of OPTION GRANTOR, enforceable against OPTION GRANTOR in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, and except that the availability of equitable
remedies, including specific performance, may be subject to the discretion
of any court before which any proceeding therefor may be brought;
(c) OPTION GRANTOR has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue, upon
exercise of the OPTION GRANTOR Option, and at all times from the date
hereof through the expiration of the OPTION GRANTOR Option will have
reserved, the Initial Number of authorized and unissued OPTION GRANTOR
Shares, such amount being subject to adjustment as provided in Section 12,
all of which, upon their issuance and delivery in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to OPTION HOLDER
upon the exercise of the OPTION GRANTOR Option, OPTION HOLDER will acquire
the OPTION GRANTOR Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the Interstate
Disclosure Schedule to the Merger Agreement, the execution and delivery of
this Agreement by OPTION GRANTOR does not, and, subject to compliance with
applicable law and the OPTION GRANTOR Articles with respect to the
repurchase of the OPTION GRANTOR Shares pursuant to Section 8(a), the
consummation by OPTION GRANTOR of the transactions contemplated hereby
will not, violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of time, or
both) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination,
cancellation, or acceleration of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets (any such conflict, violation, default, right
of termination, cancellation, acceleration, loss or creation, hereinafter
a "Violation") of OPTION GRANTOR or any of its Subsidiaries, pursuant to
(i) any provision of the OPTION GRANTOR Articles or the
Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession,
franchise or license (any of the foregoing in effect on the date
hereof being referred to as a "Material Contract") of OPTION
GRANTOR or its subsidiaries or to which any of them is a party,
or
(iii) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to OPTION GRANTOR or its
properties or assets,
which Violation, in the case of each clauses (ii) and (iii), could
reasonably be expected to have an OPTION GRANTOR Material Adverse Effect
(except that no representation or warranty is given concerning any
Violation of a Material Contract with respect to the repurchase of OPTION
GRANTOR Shares pursuant to Section 8(a));
(f) except as described in Section 6.4(c) of the Interstate
Disclosure Schedule to the Merger Agreement or Section 1 or 3 hereof, the
execution and delivery of this Agreement by OPTION GRANTOR does not, and
the performance of this Agreement by OPTION GRANTOR will not, require any
consent, approval, authorization or permit of, filing with or notification
to, any Governmental Authority;
(g) none of OPTION GRANTOR, any of its affiliates or anyone
acting on its or their behalf, has issued, sold or offered any security of
OPTION GRANTOR to any person under circumstances that would cause the
issuance and sale of OPTION GRANTOR Shares, as contemplated by this
Agreement, to be subject to the registration requirements of the
Securities Act as in effect on the date hereof, and, assuming the
representations and warranties of OPTION HOLDER contained in Section 7(g)
are true and correct, the issuance, sale and delivery of the OPTION
GRANTOR Shares hereunder would be exempt from the registration and
prospectus delivery requirements of the Securities Act, as in effect on
the date hereof (and OPTION GRANTOR shall not take any action which would
cause the issuance, sale, and delivery of OPTION GRANTOR Shares hereunder
not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION GRANTOR with
a view to the public distribution thereof in violation of any applicable
provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER. OPTION
HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has the
corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder;
(b) this Agreement has been duly and validly executed and
delivered by OPTION HOLDER and, assuming the due authorization, execution
and delivery hereof by OPTION GRANTOR and the receipt of all required
regulatory approvals, constitutes a valid and binding obligation of OPTION
HOLDER, enforceable against OPTION HOLDER in accordance with its
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceeding may be
brought;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant hereto,
OPTION HOLDER will have taken all necessary corporate action to authorize
for issuance and to permit it to issue such OPTION HOLDER Shares, all of
which, upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to OPTION
GRANTOR in consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION GRANTOR will acquire the OPTION HOLDER Shares free and
clear of all claims, liens, charges, encumbrances and security interests
of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES Disclosure
Schedule to the Merger Agreement, the execution and delivery of this
Agreement by OPTION HOLDER does not, and the consummation by OPTION HOLDER
of the transactions contemplated hereby will not, violate, conflict with,
or result in the breach of any provision of, or constitute a default (with
or without notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION HOLDER or its
properties or assets,
which Violation, in the case of each of clauses (ii) or (iii), would have
an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 5.4(c) of the IES Disclosure
Schedule to the Merger Agreement or Section 1 or 3 hereof, the execution
and delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated hereby will
not, require any consent, approval, authorization or permit of, filing
with or notification to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise of the
OPTION GRANTOR Option will be acquired for OPTION HOLDER's own account,
for investment purposes only and will not be, and the OPTION GRANTOR
Option is not being, acquired by OPTION HOLDER with a view to the public
distribution thereof, in violation of any applicable provision of the
Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION HOLDER by
written notice (x) at any time during which the OPTION GRANTOR Option is
exercisable pursuant to Section 2 (the "Repurchase Period"), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all or any
portion of the OPTION GRANTOR Option, at the price set forth in
subparagraph (i) below, or, (y) at any time prior to May 10, 1997
(provided that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may terminate the
Merger Agreement pursuant to Section 10.1(b) of the Merger Agreement has
been extended to May 10, 1998), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION GRANTOR
Articles and Bylaws and OPTION GRANTOR's Material Contracts, repurchase
from OPTION HOLDER all or any portion of the OPTION GRANTOR Shares
purchased by OPTION HOLDER pursuant to the OPTION GRANTOR Option, at the
price set forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer Price" (as
defined below) for shares of OPTION GRANTOR Common Stock as of the
date OPTION HOLDER gives notice of its intent to exercise its rights
under this Section 8 and the Exercise Price, multiplied by the number
of OPTION GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION HOLDER is
exercising its rights under this Section 8), but only if the
Market/Offer Price is greater than the Exercise Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of (I) the price per
share offered as of such date pursuant to any tender or exchange
offer or other offer with respect to a Business Combination involving
OPTION GRANTOR as the Target Party which was made prior to such date
and not terminated or withdrawn as of such date and (II) the Fair
Market Value of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the Exercise
Price paid by OPTION HOLDER per OPTION GRANTOR Share acquired
pursuant to the OPTION GRANTOR Option, and (b) the difference between
the "Offer Price" (as defined below) and the Exercise Price, but only
if the offer Price is greater that the Exercise Price, and (II) the
number of OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the "Offer Price"
shall be the highest price per share offered pursuant to a tender or
exchange offer or other Business Combination offer involving OPTION
GRANTOR as the Target Party during the Repurchase Period prior to the
delivery by OPTION HOLDER of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION HOLDER shall
have previously elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and delivery of
OPTION HOLDER Shares, then OPTION GRANTOR shall, if so requested by OPTION
HOLDER, in fulfillment of its obligation pursuant to Section 8(a)(y) (that
is, with respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of Section
8(a)(ii)(A)(I)), redeliver the certificates for such OPTION HOLDER Shares
to OPTION HOLDER, free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever; provided, however, that if
at any time less than all of the OPTION GRANTOR Shares so purchased by
OPTION HOLDER pursuant to the OPTION GRANTOR Option are to be repurchased
by OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION GRANTOR
shall be obligated to redeliver to OPTION HOLDER the same proportion of
such OPTION HOLDER Shares as the number of OPTION GRANTOR Shares that
OPTION GRANTOR is then obligated to repurchase bears to the number of
OPTION GRANTOR Shares acquired by OPTION HOLDER upon exercise of the
OPTION GRANTOR Option and (ii) OPTION HOLDER shall issue to OPTION GRANTOR
new certificates representing those OPTION HOLDER Shares which are not due
to be redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the certificates
redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS OR SHARES.
In the event OPTION HOLDER exercises its rights under this Section 8,
OPTION GRANTOR shall, within ten business days thereafter, pay the
required amount to OPTION HOLDER in immediately available funds and OPTION
HOLDER shall surrender to OPTION GRANTOR the OPTION GRANTOR Option or the
certificate or certificates evidencing the OPTION GRANTOR Shares purchased
by OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant that it
owns the OPTION GRANTOR Option or such shares and that the OPTION GRANTOR
Option or such shares are then free and clear of all liens, claims,
damages, charges and encumbrances of any kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has elected to
purchase OPTION GRANTOR Shares pursuant to the exercise of the OPTION
GRANTOR Option by the issuance and delivery of OPTION HOLDER Shares,
notwithstanding that OPTION HOLDER may no longer hold any such OPTION
GRANTOR Shares or that OPTION HOLDER elects not to exercise its other
rights under this Section 8, OPTION HOLDER may require, at any time or
from time to time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date after
which either party may terminate the Merger Agreement pursuant to Section
10.1(b) of the Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR to sell to OPTION HOLDER any such OPTION HOLDER Shares at the
price attributed to such OPTION HOLDER Shares pursuant to Section 4 plus
interest at the rate of 8.75% per annum on such amount from the Closing
Date relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any dividends
on such OPTION HOLDER Shares paid during such period or declared and
payable to stockholders of record on a date during such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S OPTION. In the
event the repurchase price specified in Section 8(a) would subject the
purchase of the OPTION GRANTOR Option or the OPTION GRANTOR Shares
purchased by OPTION HOLDER pursuant to the OPTION GRANTOR Option to a vote
of the shareholders of OPTION GRANTOR pursuant to applicable law or the
OPTION GRANTOR Articles, then OPTION HOLDER may, at its election, reduce
the repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and prior to
the fifth anniversary of the date hereof (the "Expiration Date"), each
party shall vote any shares of capital stock of the other party acquired
by such party pursuant to this Agreement ("Restricted Shares"), including
any OPTION HOLDER Shares issued pursuant to Section 1(b), or otherwise
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), by such
party on each matter submitted to a vote of shareholders of such other
party for and against such matter in the same proportion as the vote of
all other shareholders of such other party are voted (whether by proxy or
otherwise) for and against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration Date,
neither party shall, directly or indirectly, by operation of law or
otherwise, sell, assign, pledge, or otherwise dispose of or transfer any
Restricted Shares beneficially owned by such party, other than (i)
pursuant to Section 8, or (ii) in accordance with Section 10(b) or Section
11.
(b) PERMITTED SALES. Following the termination of the Merger
Agreement, a party shall be permitted to sell any Restricted Shares
beneficially owned by it if such sale is made pursuant to a tender or
exchange offer that has been approved or recommended, or otherwise
determined to be fair to and in the best interests of the shareholders of
the other party, by a majority of the members of the Board of Directors of
such other party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement, either
party hereto that owns Restricted Shares (a "Designated Holder") may by
written notice (the "Registration Notice") to the other party (the
"Registrant") request the Registrant to register under the Securities Act
all or any part of the Restricted Shares beneficially owned by such
Designated Holder (the "Registrable Securities") pursuant to a bona fide
firm commitment underwritten public offering, in which the Designated
Holder and the underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use their
best efforts to prevent any person (including any Group (as used in Rule
13d-5 under the Exchange Act)) and its affiliates from purchasing through
such offering Restricted Shares representing more than 1% of the
outstanding shares of common stock of the Registrant on a fully diluted
basis (a "Permitted Offering").
(b) The Registration Notice shall include a certificate
executed by the Designated Holder and its proposed managing underwriter,
which underwriter shall be an investment banking firm of nationally
recognized standing (the "Manager"), stating that
(i) they have a good faith intention to commence promptly
a Permitted Offering, and
(ii) the manager in good faith believes that, based on the
then-prevailing market conditions, it will be able to sell the
Registrable Securities at a per share price equal to at least 80% of
the then Fair Market Value of such shares.
(c) The Registrant (and/or any person designated by the
Registrant) shall thereupon have the option exercisable by written notice
delivered to the Designated Holder within ten business days after the
receipt of the Registration Notice, irrevocably to agree to purchase all
or any part of the Registrable Securities proposed to be so sold for cash
at a price (the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and (ii) the
then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the Registrant
(or its designee) under Section 11(c) shall take place at a closing to be
held at the principal executive offices of the Registrant or at the
offices of its counsel at any reasonable date and time designated by the
Registrant and/or such designee in such notice within twenty business days
after delivery of such notice, and any payment for the shares to be so
purchased shall be made by delivery at the time of such closing in
immediately available funds.
(e) If the Registrant does not elect to exercise its option
pursuant to this Section 11 with respect to all Registrable Securities, it
shall use its best efforts to effect, as promptly as practicable, the
registration under the Securities Act of the unpurchased Registrable
Securities proposed to be so sold; provided, however, that
(i) neither party shall be entitled to demand more than an
aggregate of two effective registration statements hereunder, and
(ii) the Registrant will not be required to file any such
registration statement during any period of time (not to exceed 40
days after such request in the case of clause (A) below or 90 days in
the case of clauses (B) and (C) below) when
(A) the Registrant is in possession of material non-
public information which it reasonably believes would be
detrimental to be disclosed at such time and, in the opinion of
counsel to the Registrant, such information would be required to
be disclosed if a registration statement were filed at that
time;
(B) the Registrant is required under the Securities Act
to include audited financial statements for any period in such
registration statement and such financial statements are not yet
available for inclusion in such registration statement; or
(C) the Registrant determines, in its reasonable
judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving
the Registrant or any of its affiliates.
(f) The Registrant shall use its reasonable best efforts to
cause any Registrable Securities registered pursuant to this Section 11 to
be qualified for sale under the securities or Blue Sky laws of such
jurisdictions as the Designated Holder may reasonably request and shall
continue such registration or qualification in effect in such
jurisdiction; provided, however, that the Registrant shall not be required
to qualify to do business in, or consent to general service of process in,
any jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section 11 are
subject to the condition that the Designated Holder shall provide the
Registrant with such information with respect to such holder's Registrable
Securities, the plans for the distribution thereof, and such other
information with respect to such holder as, in the reasonable judgment of
counsel for the Registrant, is necessary to enable the Registrant to
include in such registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11 shall be
effected at the Registrant's expense, except for underwriting discounts
and commissions and the fees and the expenses of counsel to the Designated
Holder, and the Registrant shall provide to the underwriters such
documentation (including certificates, opinions of counsel and "comfort"
letters from auditors) as is customary in connection with underwritten
public offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under this
Section 11, the parties agree
(i) to indemnify each other and the underwriters in the
customary manner,
(ii) to enter into an underwriting agreement in form and
substance customary for transactions of such type with the Manager
and the other underwriters participating in such offering, and
(iii) to take all further actions which shall be reasonably
necessary to effect such registration and sale (including if the
Manager deems it necessary, participating in road-show
presentations).
(j) The Registrant shall be entitled to include (at its
expense) additional shares of its common stock in a registration effected
pursuant to this Section 11 only if and to the extent the Manager
determines that such inclusion will not adversely affect the prospects for
success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without
limitation to any restriction on OPTION GRANTOR contained in this
Agreement or in the Merger Agreement, in the event of any change in OPTION
GRANTOR Common Stock by reason of stock dividends, splitups, mergers
(other than the Merger), recapitalizations, combinations, exchange of
shares or the like, the type and number of shares or securities subject to
the OPTION GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION HOLDER its
rights hereunder, including the right to purchase from OPTION GRANTOR (or
its successors) shares of OPTION GRANTOR Common Stock (or such other
shares or securities into which OPTION GRANTOR Common Stock has been so
changed) representing the Option Shares Percentage of the Initial Number
of shares of OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in Section 1.
13. RESTRICTIVE LEGENDS. Each certificate representing OPTION
GRANTOR Shares issued to OPTION HOLDER hereunder, and OPTION HOLDER
Shares, if any, delivered to OPTION GRANTOR at a Closing, shall include a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE OPTION HOLDER STOCK OPTION AND TRIGGER
PAYMENT AGREEMENT, DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY
BE OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of the
Securities Act and state securities or Blue Sky laws in the above
legend shall be removed by delivery of substitute certificate(s)
without such reference if OPTION HOLDER or OPTION GRANTOR, as the
case may be, shall have delivered to the other party a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form
and substance satisfactory to the other party, to the effect that
such legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this Agreement in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such
reference; and
(iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied.
In addition, such certificates shall bear any other legend as may be
required by law. Certificates representing shares sold in a registered
public offering pursuant to Section 11 shall not be required to bear the
legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
(b) Except as expressly provided for in this Agreement, neither
this Agreement nor the rights or obligations of either party hereto are
assignable, except by operation of law, or with the written consent of the
other party.
(c) Nothing contained in this Agreement, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective permitted assigns any rights or remedies of any nature
whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in compliance with
the provisions of Section 11 shall, upon consummation of such sale, be
free of the restrictions imposed with respect to such shares by this
Agreement, unless and until such party shall repurchase or otherwise
become the beneficial owner of such shares, and any transferee of such
shares shall not be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specified terms
or were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect.
(b) In the event any court or other competent authority holds
any provisions of this Agreement to be null, void or unenforceable, the
parties hereto shall negotiate in good faith the execution and delivery of
an amendment to this Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the parties
hereto with respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such court or
regulatory agency determines that OPTION HOLDER is not permitted to
acquire, or OPTION GRANTOR is not permitted to repurchase pursuant to
Section 8, the full number of shares of OPTION GRANTOR Common Stock
provided in Section 1 hereof (as the same may be adjusted), it is the
express intention of OPTION GRANTOR to allow OPTION HOLDER to acquire or
to require OPTION GRANTOR to repurchase such lesser number of shares as
may be permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other competent
authority hold any provision of this Agreement or part hereof to be null,
void or unenforceable, or order any party to take any action inconsistent
herewith, or not take any action required herein, the other party shall
not be entitled to specific performance of such provision or part hereof
or to any other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part hereof
as the result of such holding or order.
17. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered personally,
or (b) if sent by overnight courier service (receipt confirmed in
writing), or (c) if delivered by facsimile transmission (with receipt
confirmed), or (d) five days after being mailed by registered or certified
mail (return receipt requested) to the parties in each case to the
following addresses (or at such other address for a party as shall be
specified by like notice):
A. If to OPTION HOLDER, to:
IES Industries Inc.
IES Tower
000 Xxxxx Xxxxxx X.X.
Xxxxx Xxxxxx, Xxxx 00000
Attention: Xxx Xxx
Fax: (000) 000-0000
with a copy to:
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
B. If to OPTION GRANTOR, to:
Interstate Power Company
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxx
Chairman
Fax: (000) 000-0000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. X'Xxxxxx, Esq.
Fax: (000) 000-0000
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed entirely within such State and
without regard to its choice of law principles or to any requirement as to
jurisdiction or service of process contained in Section 2708 of Title 6 of
the Delaware Code.
19. INTERPRETATION.
(a) When reference is made in this Agreement to Articles,
Sections or Exhibits, such reference shall be to an Article, Section or
Exhibit of this Agreement, as the case may be, unless otherwise indicated.
(b) The table of contents and headings contained in this
Agreement are for reference purposes and shall not affect in any way the
meaning or interpretation of the Agreement.
(c) Whenever the words "include," "includes," or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation."
(d) Whenever "or" is used in this Agreement it shall be
construed in the nonexclusive sense.
20. COUNTERPARTS; EFFECT. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
21. AMENDMENTS; WAIVER. This Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only by
an instrument in writing signed on behalf of each of the parties hereto,
or, in the case of a waiver, by an instrument signed on behalf of the
party waiving compliance.
22. EXTENSION OF TIME PERIODS. The time periods for exercises
of certain rights under Sections 2, 7 and 8 shall be extended (but in no
event by more than six months):
(a) to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and for the expiration of all statutory
waiting periods; and
(b) to the extent necessary to avoid any liability under
Section 16(b) of the Exchange Act by reason of such exercise.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as
of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
IES INDUSTRIES INC.
By: /s/ Xxx Xxx
Name: Xxx Xxx
Title: Chairman of the Board, President
and Chief Executive Officer
