EX-2.7
OPTION GRANTOR/OPTION HOLDER STOCK OPTION
AND TRIGGER PAYMENT AGREEMENT
This STOCK OPTION AGREEMENT, dated as of November 10,
1995 (the "Agreement") by and among Interstate Power Company, a
corporation organized under the laws of the State of Delaware
("OPTION GRANTOR" or the "Company") and IES Industries Inc., a
corporation organized under the laws of the State of Iowa
("OPTION HOLDER").
W I T N E S S E T H T H A T:
WHEREAS, concurrently with the execution and delivery
of this Agreement, OPTION GRANTOR, OPTION HOLDER, WPL Holdings,
Inc., a corporation organized under the laws of the State of
Wisconsin ("WPL"), and AMW Acquisition, Inc., a wholly-owned
subsidiary of WPL organized under the laws of the State of
Delaware ("AMW"), are entering into an Agreement and Plan of
Merger, dated as of November 10, 1995, (the "Merger Agreement"),
which provides, inter alia, upon the terms and subject to the
conditions thereof, for the merger of OPTION HOLDER with and into
WPL in accordance with the laws of the States of Wisconsin and
Iowa (the "IES Merger"), and the merger of AMW with and into
OPTION GRANTOR in accordance with the laws of the State of
Delaware (the "Interstate Merger, and together with the IES
Merger, the "Merger");
WHEREAS, in connection with the execution of the Merger
Agreement, OPTION GRANTOR, OPTION HOLDER and WPL are entering
into certain stock option agreements dated as of the date hereof,
of which this Agreement is one, whereby the parties hereto grant
each other an option with respect to certain shares of each
other's common stock on the terms and subject to the conditions
set forth therein (the "Stock Option Agreements"); and
WHEREAS, as a condition to OPTION HOLDER's willingness
to enter into the Merger Agreement, OPTION HOLDER has requested
that OPTION GRANTOR agree, and OPTION GRANTOR has so agreed, to
grant to OPTION HOLDER an option with respect to certain shares
of OPTION GRANTOR's common stock, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, to induce OPTION HOLDER to enter into
the Merger Agreement and certain of the Stock Option Agreements,
and in consideration of the representations, warranties,
covenants and agreements contained herein, in the Merger
Agreement and in the Stock Option Agreements to which OPTION
GRANTOR and OPTION HOLDER are parties, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the receipt of all regulatory approvals
and orders required by OPTION GRANTOR as set forth in Section
6.4(c) of the Interstate Disclosure Schedule to the Merger
Agreement and by OPTION HOLDER as set forth in Section 5.4(c) of
the IES Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR hereby grants OPTION HOLDER an irrevocable option (the
"OPTION GRANTOR Option") to purchase up to that number of shares,
subject to adjustment as provided in Section 12 (the "OPTION
GRANTOR Shares"), of common stock, par value $3.50 per share, of
OPTION GRANTOR (the "OPTION GRANTOR Common Stock") equal to a
percentage (the "Option Shares Percentage"), which Option Shares
Percentage is equal to the OPTION HOLDER's Participation
Percentage as defined below in subsection (e), of 1,903,293
shares of OPTION GRANTOR Common Stock (being 19.9% of the number
of shares of OPTION GRANTOR Common Stock issued and outstanding
as of November 10, 1995, the "Initial Number") in the manner set
forth below, at a price (the "Exercise Price") per OPTION GRANTOR
Share of $28.9375 (which is equal to the Fair Market Value (as
defined below) of a OPTION GRANTOR Share as of the date hereof).
(b) The Exercise Price shall be payable, at OPTION
HOLDER's option, as follows:
(i) in cash, or
(ii) subject to the receipt of all approvals of
any Governmental Authority required for OPTION GRANTOR to
acquire, and OPTION HOLDER to issue, the OPTION HOLDER
Shares (as defined below) from OPTION HOLDER, in shares of
common stock, no par value, of OPTION HOLDER ("OPTION HOLDER
Shares"),
in either case in accordance with Section 4 hereof.
(c) Notwithstanding the foregoing, in no event shall
the number of OPTION GRANTOR Shares for which the OPTION GRANTOR
Option is exercisable exceed the product of the Option Shares
Percentage and the Initial Number, subject to adjustment as
provided in Section 12.
(d) As used herein, the "Fair Market Value" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during the
ten NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
(e) For purposes of this Agreement the term
"Participation Percentage" shall have the same meaning as in
Section 10.3(f)(i) of the Merger Agreement, except that the
numerator and denominator shall be calculated based on the number
of shares of WPL Common Stock which would be issuable (or, in the
case of WPL, retained by its shareholders) on a fully diluted
basis had the Effective Time occurred as of the date on which the
Exercise Notice is delivered under Section 2 hereof or the date
on which demand for the Trigger Payment (as defined herein) is
given under Section 5 hereof, as the case may be. Other
capitalized terms used herein but not defined herein shall have
the meanings set forth in the Merger Agreement.
2. EXERCISE OF OPTION.
(a) The OPTION GRANTOR Option may be exercised by
OPTION HOLDER, in whole or in part, at any time or from time to
time after the Merger Agreement becomes terminable by OPTION
HOLDER under circumstances which could entitle OPTION HOLDER to a
termination fee under Section 10.3(a) of the Merger Agreement
(provided that the events specified in Section 10.3(a)(ii)(A) of
the Merger Agreement shall have occurred, although the events
specified in Section 10.3(a)(ii)(B) thereof need not have
occurred), or Section 10.3(b) of the Merger Agreement (regardless
of whether the Merger Agreement is actually terminated or whether
there occurs a closing of any Business Combination involving a
Target Party or a closing by which a Target Party becomes a
Subsidiary), any such event by which the Merger Agreement becomes
so terminable by OPTION HOLDER being referred to herein as a
"Trigger Event").
(b) (i) OPTION GRANTOR shall notify OPTION HOLDER
promptly in writing of the occurrence of any Trigger Event,
it being understood that the giving of such notice by OPTION
GRANTOR shall not be a condition to the right of OPTION
HOLDER to exercise the OPTION GRANTOR Option.
(ii) In the event OPTION HOLDER wishes to exercise
the OPTION GRANTOR Option, OPTION HOLDER shall deliver to
OPTION GRANTOR written notice (an "Exercise Notice")
specifying the total number of OPTION GRANTOR Shares it
wishes to purchase.
(iii) Upon the giving by OPTION HOLDER to
OPTION GRANTOR of the Exercise Notice and the tender of the
applicable aggregate Exercise Price, OPTION HOLDER, to the
extent permitted by law and OPTION GRANTOR's organizational
documents, and provided that the conditions to OPTION
GRANTOR's obligation to issue the OPTION GRANTOR Shares to
OPTION HOLDER hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed to be the holder of
record of the OPTION GRANTOR Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
OPTION GRANTOR shall then be closed or that certificates
representing such OPTION GRANTOR Shares shall not then be
actually delivered to OPTION HOLDER.
(iv) Each closing of a purchase of OPTION GRANTOR
Shares (a "Closing") shall occur at a place, on a date, and
at a time designated by OPTION HOLDER in an Exercise Notice
delivered at least two business days prior to the date of
the Closing.
(c) The OPTION GRANTOR Option shall terminate upon the
earliest to occur of:
(i) the Effective Time of the Merger;
(ii) the termination of the Merger Agreement
pursuant to Section 10.1 thereof, other than under
circumstances which also constitute a Trigger Event under
this Agreement;
(iii) 180 days following any termination of the
Merger Agreement upon or during the continuance of a Trigger
Event (or if, at the expiration of such 180 day period, the
OPTION GRANTOR Option cannot be exercised by reason of any
applicable judgment, decree, order, law or regulation, ten
business days after such impediment to exercise shall have
been removed or shall have become final and not subject to
appeal, but in no event under this clause (iii) later than
May 10, 1998); and
(iv) payment by OPTION GRANTOR of the Trigger
Payment set forth in Section 5 of this Agreement to OPTION
HOLDER.
(d) Notwithstanding the foregoing, the OPTION GRANTOR
Option may not be exercised if (i) OPTION HOLDER is in material
breach of any of its representations or warranties, or in
material breach of any of its covenants or agreements, contained
in this Agreement or in the Merger Agreement, or (ii) a Trigger
Payment has been paid pursuant to Section 5 of this Agreement or
demand therefor has been made and not withdrawn.
3. CONDITIONS TO CLOSING. The obligation of OPTION
GRANTOR to issue the OPTION GRANTOR Shares to OPTION HOLDER
hereunder is subject to the conditions that
(a) all waiting periods, if any, under the HSR Act
applicable to the issuance and acquisition of the OPTION GRANTOR
Shares hereunder shall have expired or have been terminated;
(b) the OPTION GRANTOR Shares, and any OPTION HOLDER
Shares which are issued in payment of the Exercise Price, shall
have been approved for listing on the NYSE subject only to
official notice of issuance;
(c) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required
in connection with the issuance by OPTION GRANTOR and the
acquisition by OPTION HOLDER of the OPTION GRANTOR Shares
hereunder shall have been obtained or made, including, without
limitation, the approval of the SEC under Sections 9 and 10 of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), the approval of the Iowa Utilities Board, the Public
Service Commission of Minnesota and the Illinois Commerce
Commission of the issuance of the OPTION GRANTOR Shares by OPTION
GRANTOR and, if applicable, the acquisition of OPTION GRANTOR
Shares by OPTION HOLDER, and the approval of the Iowa Utilities
Board of the acquisition of the OPTION GRANTOR Shares by OPTION
HOLDER and, if applicable, the acquisition by OPTION GRANTOR of
the OPTION HOLDER Shares constituting the Exercise Price
hereunder; and
(d) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
The condition set forth in paragraph (b) above may be waived by
OPTION GRANTOR, in the case of OPTION HOLDER Shares, and by
OPTION HOLDER, in the case of OPTION GRANTOR Shares, in the sole
discretion of the waiving party.
4. CLOSING. At any Closing,
(a) OPTION GRANTOR shall deliver to OPTION HOLDER or
its designee a single certificate in definitive form representing
the number of OPTION GRANTOR Shares designated by OPTION HOLDER
in its Exercise Notice, such certificate to be registered in the
name of OPTION HOLDER and to bear the legend set forth in Section
13; and
(b) OPTION HOLDER shall deliver to OPTION GRANTOR the
aggregate price for the OPTION GRANTOR Shares so designated and
being purchased by
(i) wire transfer of immediately available funds
or certified check or bank check, or
(ii) subject to the condition in Section 1(b)(ii),
delivery of a certificate or certificates representing the
number of OPTION HOLDER Shares being issued by OPTION HOLDER
in consideration thereof, determined in accordance with
Section 4(c).
(c) In the event that OPTION HOLDER issues OPTION
HOLDER Shares to OPTION GRANTOR in consideration of OPTION
GRANTOR Shares pursuant to Section 4(b)(ii), the number of OPTION
HOLDER Shares to be so issued shall be equal to the quotient
obtained by dividing:
(i) the product of (x) the number of OPTION
GRANTOR Shares with respect to which the OPTION GRANTOR
Option is being exercised and (y) the Exercise Price, by
(ii) the Fair Market Value of the OPTION HOLDER
Shares as of the date immediately preceding the date the
Exercise Notice is delivered to OPTION GRANTOR.
(d) OPTION GRANTOR shall pay all expenses, and any and
all Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of
stock certificates under this Section 4.
5. TRIGGER PAYMENT.
(a) Trigger Payment. Subject to the provisions of
Section 10.3(e) of the Merger Agreement, if a Trigger Event shall
have occurred and any regulatory approval or order required for
the issuance by OPTION GRANTOR, or the acquisition by OPTION
HOLDER, of the OPTION GRANTOR Option pursuant to Section 1 hereof
shall not have been obtained, OPTION HOLDER shall have the right
to receive, and OPTION GRANTOR shall pay to OPTION HOLDER, an
amount (the "Trigger Payment") equal to the product of
(i) the maximum number of OPTION GRANTOR Shares that would
have been subject to purchase by OPTION HOLDER upon exercise
of the OPTION GRANTOR Option pursuant to Sections 1 and 2
hereof if all such regulatory approvals or orders had been
obtained, and
(ii) the difference between (A) the Market/Offer Price (as
defined herein), determined as of the date on which notice
of demand for the Trigger Payment is given by OPTION HOLDER,
and (B) the Exercise Price (but only if such Market/Offer
Price is higher than such Exercise Price).
Demand for the Trigger Payment shall be given by notice in
accordance with the provisions of Section 17 hereof. The Trigger
Payment shall be paid to OPTION HOLDER by OPTION GRANTOR on the
Payment Date (as defined herein), by wire transfer of immediately
available funds to an account to be designated in writing by
OPTION HOLDER not less than two business days before the Payment
Date.
(b) Payment Date. For purposes of this Section 5,
"Payment Date" means the date on which termination fees are
required to be paid by OPTION GRANTOR to OPTION HOLDER under
Sections 10.3(a) or 10.3(b), as the case may be, of the Merger
Agreement as a result of the occurrence of the Trigger Event
referred to in subsection (a) of this Section 5.
(c) Certain Conditions. OPTION GRANTOR shall have no
obligation to pay the Trigger Payment if OPTION HOLDER is in
material breach of any of its representations or warranties, or
in material breach of any of its covenants or agreements,
contained in this Agreement or in the Merger Agreement.
6. REPRESENTATIONS AND WARRANTIES OF OPTION GRANTOR.
OPTION GRANTOR represents and warrants to OPTION HOLDER that
(a) Except as set forth in Section 6.4(a) of the
Interstate Disclosure Schedule to the Merger Agreement, OPTION
GRANTOR has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, subject in
the case of the repurchase of the OPTION GRANTOR Shares pursuant
to Section 8(a) to applicable law and the provisions of OPTION
GRANTOR's Articles of Incorporation, as amended (the "OPTION
GRANTOR Articles");
(b) this Agreement has been duly and validly executed
and delivered by OPTION GRANTOR, and, assuming the due
authorization, execution and delivery hereof by OPTION HOLDER and
the receipt of all required regulatory approvals, constitutes a
valid and binding obligation of OPTION GRANTOR, enforceable
against OPTION GRANTOR in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, and except that the availability of
equitable remedies, including specific performance, may be
subject to the discretion of any court before which any
proceeding therefor may be brought;
(c) OPTION GRANTOR has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the OPTION GRANTOR Option, and at all
times from the date hereof through the expiration of the OPTION
GRANTOR Option will have reserved, the Initial Number of
authorized and unissued OPTION GRANTOR Shares, such amount being
subject to adjustment as provided in Section 12, all of which,
upon their issuance and delivery in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable;
(d) upon delivery of the OPTION GRANTOR Shares to
OPTION HOLDER upon the exercise of the OPTION GRANTOR Option,
OPTION HOLDER will acquire the OPTION GRANTOR Shares free and
clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever;
(e) except as described in Section 6.4(b) of the
Interstate Disclosure Schedule to the Merger Agreement, the
execution and delivery of this Agreement by OPTION GRANTOR does
not, and, subject to compliance with applicable law and the
OPTION GRANTOR Articles with respect to the repurchase of the
OPTION GRANTOR Shares pursuant to Section 8(a), the consummation
by OPTION GRANTOR of the transactions contemplated hereby will
not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or
a lapse of time, or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right
of termination, cancellation, or acceleration of any obligation
or the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination,
cancellation, acceleration, loss or creation, hereinafter a
"Violation") of OPTION GRANTOR or any of its Subsidiaries,
pursuant to
(i) any provision of the OPTION GRANTOR Articles
or the Bylaws of OPTION GRANTOR,
(ii) any provisions of any material loan or credit
agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument,
permit, concession, franchise or license (any of the
foregoing in effect on the date hereof being referred
to as a "Material Contract") of OPTION GRANTOR or its
subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
GRANTOR or its properties or assets,
which Violation, in the case of each clauses (ii) and (iii),
could reasonably be expected to have an OPTION GRANTOR Material
Adverse Effect (except that no representation or warranty is
given concerning any Violation of a Material Contract with
respect to the repurchase of OPTION GRANTOR Shares pursuant to
Section 8(a));
(f) except as described in Section 6.4(c) of the
Interstate Disclosure Schedule to the Merger Agreement or Section
1 or 3 hereof, the execution and delivery of this Agreement by
OPTION GRANTOR does not, and the performance of this Agreement by
OPTION GRANTOR will not, require any consent, approval,
authorization or permit of, filing with or notification to, any
Governmental Authority;
(g) none of OPTION GRANTOR, any of its affiliates or
anyone acting on its or their behalf, has issued, sold or offered
any security of OPTION GRANTOR to any person under circumstances
that would cause the issuance and sale of OPTION GRANTOR Shares,
as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act as in effect on
the date hereof, and, assuming the representations and warranties
of OPTION HOLDER contained in Section 7(g) are true and correct,
the issuance, sale and delivery of the OPTION GRANTOR Shares
hereunder would be exempt from the registration and prospectus
delivery requirements of the Securities Act, as in effect on the
date hereof (and OPTION GRANTOR shall not take any action which
would cause the issuance, sale, and delivery of OPTION GRANTOR
Shares hereunder not to be exempt from such requirements); and
(h) any OPTION HOLDER Shares acquired pursuant to this
Agreement will be acquired for OPTION GRANTOR's own account, for
investment purposes only, and will not be acquired by OPTION
GRANTOR with a view to the public distribution thereof in
violation of any applicable provision of the Securities Act.
7. REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER.
OPTION HOLDER represents and warrants to OPTION GRANTOR that
(a) Except as set forth in Schedule 5.4(a) of the IES
Disclosure Schedule to the Merger Agreement, OPTION HOLDER has
the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder;
(b) this Agreement has been duly and validly executed
and delivered by OPTION HOLDER and, assuming the due
authorization, execution and delivery hereof by OPTION GRANTOR
and the receipt of all required regulatory approvals, constitutes
a valid and binding obligation of OPTION HOLDER, enforceable
against OPTION HOLDER in accordance with its respective terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement
of creditors' rights generally, and except that the availability
of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any
proceeding may be brought;
(c) prior to any delivery of OPTION HOLDER Shares in
consideration of the purchase of OPTION GRANTOR Shares pursuant
hereto, OPTION HOLDER will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such
OPTION HOLDER Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable;
(d) upon any delivery of such OPTION HOLDER Shares to
OPTION GRANTOR in consideration of the purchase of OPTION GRANTOR
Shares pursuant hereto, OPTION GRANTOR will acquire the OPTION
HOLDER Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever;
(e) except as described in Section 5.4(b) of the IES
Disclosure Schedule to the Merger Agreement, the execution and
delivery of this Agreement by OPTION HOLDER does not, and the
consummation by OPTION HOLDER of the transactions contemplated
hereby will not, violate, conflict with, or result in the breach
of any provision of, or constitute a default (with or without
notice or a lapse of time, or both) under, or result in any
Violation by OPTION HOLDER or any of its Subsidiaries, pursuant
to
(i) any provision of the Articles of Incorporation or
Bylaws of OPTION HOLDER,
(ii) any Material Contract of OPTION HOLDER or any of
its subsidiaries or to which any of them is a party, or
(iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to OPTION
HOLDER or its properties or assets,
which Violation, in the case of each of clauses (ii) or (iii),
would have an OPTION HOLDER Material Adverse Effect;
(f) except as described in Section 5.4(c) of the IES
Disclosure Schedule to the Merger Agreement or Section 1 or 3
hereof, the execution and delivery of this Agreement by OPTION
HOLDER does not, and the consummation by OPTION HOLDER of the
transactions contemplated hereby will not, require any consent,
approval, authorization or permit of, filing with or notification
to, any Governmental Authority; and
(g) any OPTION GRANTOR Shares acquired upon exercise
of the OPTION GRANTOR Option will be acquired for OPTION HOLDER's
own account, for investment purposes only and will not be, and
the OPTION GRANTOR Option is not being, acquired by OPTION HOLDER
with a view to the public distribution thereof, in violation of
any applicable provision of the Securities Act.
8. CERTAIN REPURCHASES.
(a) OPTION HOLDER "PUT". At the request of OPTION
HOLDER by written notice (x) at any time during which the OPTION
GRANTOR Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), OPTION GRANTOR (or any successor entity
thereof) shall, if permitted by applicable law, the OPTION
GRANTOR Articles and Bylaws and OPTION GRANTOR's Material
Contracts, repurchase from OPTION HOLDER all or any portion of
the OPTION GRANTOR Option, at the price set forth in subparagraph
(i) below, or, (y) at any time prior to May 10, 1997 (provided
that such date shall be extended to May 10, 1998 under the
circumstances where the date after which either party may
terminate the Merger Agreement pursuant to Section 10.1(b) of the
Merger Agreement has been extended to May 10, 1998), OPTION
GRANTOR (or any successor entity thereof) shall, if permitted by
applicable law, the OPTION GRANTOR Articles and Bylaws and OPTION
GRANTOR's Material Contracts, repurchase from OPTION HOLDER all
or any portion of the OPTION GRANTOR Shares purchased by OPTION
HOLDER pursuant to the OPTION GRANTOR Option, at the price set
forth in subparagraph (ii) below:
(i) (A) The difference between the "Market/Offer
Price" (as defined below) for shares of OPTION GRANTOR
Common Stock as of the date OPTION HOLDER gives notice of
its intent to exercise its rights under this Section 8 and
the Exercise Price, multiplied by the number of OPTION
GRANTOR Shares purchasable pursuant to the OPTION GRANTOR
Option (or portion thereof with respect to which OPTION
HOLDER is exercising its rights under this Section 8), but
only if the Market/Offer Price is greater than the Exercise
Price.
(B) for purposes of this Agreement, "Market/Offer
Price") shall mean, as of any date, the higher of (I) the
price per share offered as of such date pursuant to any
tender or exchange offer or other offer with respect to a
Business Combination involving OPTION GRANTOR as the Target
Party which was made prior to such date and not terminated
or withdrawn as of such date and (II) the Fair Market Value
of OPTION GRANTOR Common Stock as of such date.
(ii) (A) the product of (I) the sum of (a) the
Exercise Price paid by OPTION HOLDER per OPTION GRANTOR
Share acquired pursuant to the OPTION GRANTOR Option, and
(b) the difference between the "Offer Price" (as defined
below) and the Exercise Price, but only if the offer Price
is greater that the Exercise Price, and (II) the number of
OPTION GRANTOR Shares so to be repurchased pursuant to this
Section 8.
(B) For purposes of this clause (ii), the "Offer
Price" shall be the highest price per share offered pursuant
to a tender or exchange offer or other Business Combination
offer involving OPTION GRANTOR as the Target Party during
the Repurchase Period prior to the delivery by OPTION HOLDER
of a notice of repurchase.
(b) REDELIVERY OF OPTION HOLDER SHARES. If OPTION
HOLDER shall have previously elected to purchase OPTION GRANTOR
Shares pursuant to the exercise of the OPTION GRANTOR Option by
the issuance and delivery of OPTION HOLDER Shares, then OPTION
GRANTOR shall, if so requested by OPTION HOLDER, in fulfillment
of its obligation pursuant to Section 8(a)(y) (that is, with
respect to the Exercise Price only and without limitation to its
obligation to pay additional consideration under clause (b) of
Section 8(a)(ii)(A)(I)), redeliver the certificates for such
OPTION HOLDER Shares to OPTION HOLDER, free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if at any time less than all
of the OPTION GRANTOR Shares so purchased by OPTION HOLDER
pursuant to the OPTION GRANTOR Option are to be repurchased by
OPTION GRANTOR pursuant to Section 8(a)(y), then (i) OPTION
GRANTOR shall be obligated to redeliver to OPTION HOLDER the same
proportion of such OPTION HOLDER Shares as the number of OPTION
GRANTOR Shares that OPTION GRANTOR is then obligated to
repurchase bears to the number of OPTION GRANTOR Shares acquired
by OPTION HOLDER upon exercise of the OPTION GRANTOR Option and
(ii) OPTION HOLDER shall issue to OPTION GRANTOR new certificates
representing those OPTION HOLDER Shares which are not due to be
redelivered to OPTION HOLDER pursuant to this Section 8(b) to the
extent that excess OPTION HOLDER Shares are included in the
certificates redelivered to OPTION HOLDER by OPTION GRANTOR.
(c) PAYMENT AND REDELIVERY OF OPTION GRANTOR OPTIONS
OR SHARES. In the event OPTION HOLDER exercises its rights under
this Section 8, OPTION GRANTOR shall, within ten business days
thereafter, pay the required amount to OPTION HOLDER in
immediately available funds and OPTION HOLDER shall surrender to
OPTION GRANTOR the OPTION GRANTOR Option or the certificate or
certificates evidencing the OPTION GRANTOR Shares purchased by
OPTION HOLDER pursuant hereto, and OPTION HOLDER shall warrant
that it owns the OPTION GRANTOR Option or such shares and that
the OPTION GRANTOR Option or such shares are then free and clear
of all liens, claims, damages, charges and encumbrances of any
kind or nature whatsoever.
(d) OPTION HOLDER "CALL". If OPTION HOLDER has
elected to purchase OPTION GRANTOR Shares pursuant to the
exercise of the OPTION GRANTOR Option by the issuance and
delivery of OPTION HOLDER Shares, notwithstanding that OPTION
HOLDER may no longer hold any such OPTION GRANTOR Shares or that
OPTION HOLDER elects not to exercise its other rights under this
Section 8, OPTION HOLDER may require, at any time or from time to
time prior to May 10, 1997 (provided that such date shall be
extended to May 10, 1998 under the circumstances where the date
after which either party may terminate the Merger Agreement
pursuant to Section 10.1(b) of the Merger Agreement has been
extended to May 10, 1998), OPTION GRANTOR to sell to OPTION
HOLDER any such OPTION HOLDER Shares at the price attributed to
such OPTION HOLDER Shares pursuant to Section 4 plus interest at
the rate of 8.75% per annum on such amount from the Closing Date
relating to the exchange of such OPTION HOLDER Shares pursuant to
Section 4 to the Closing Date under this Section 8(d) less any
dividends on such OPTION HOLDER Shares paid during such period or
declared and payable to stockholders of record on a date during
such period.
(e) REPURCHASE PRICE REDUCED AT OPTION HOLDER'S
OPTION. In the event the repurchase price specified in Section
8(a) would subject the purchase of the OPTION GRANTOR Option or
the OPTION GRANTOR Shares purchased by OPTION HOLDER pursuant to
the OPTION GRANTOR Option to a vote of the shareholders of OPTION
GRANTOR pursuant to applicable law or the OPTION GRANTOR
Articles, then OPTION HOLDER may, at its election, reduce the
repurchase price to an amount which would permit such repurchase
without the necessity for such a shareholder vote.
9. VOTING OF SHARES. Following the date hereof and
prior to the fifth anniversary of the date hereof (the
"Expiration Date"), each party shall vote any shares of capital
stock of the other party acquired by such party pursuant to this
Agreement ("Restricted Shares"), including any OPTION HOLDER
Shares issued pursuant to Section 1(b), or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), by such party on each matter submitted to a vote of
shareholders of such other party for and against such matter in
the same proportion as the vote of all other shareholders of such
other party are voted (whether by proxy or otherwise) for and
against such matter.
10. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration
Date, neither party shall, directly or indirectly, by operation
of law or otherwise, sell, assign, pledge, or otherwise dispose
of or transfer any Restricted Shares beneficially owned by such
party, other than (i) pursuant to Section 8, or (ii) in
accordance with Section 10(b) or Section 11.
(b) PERMITTED SALES. Following the termination of the
Merger Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party, which majority shall include a majority of directors who
were directors prior to the announcement of such tender or
exchange offer.
11. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement,
either party hereto that owns Restricted Shares (a "Designated
Holder") may by written notice (the "Registration Notice") to the
other party (the "Registrant") request the Registrant to register
under the Securities Act all or any part of the Restricted Shares
beneficially owned by such Designated Holder (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten
public offering, in which the Designated Holder and the
underwriters shall effect as wide a distribution of such
Registrable Securities as is reasonably practicable and shall use
their best efforts to prevent any person (including any Group (as
used in Rule 13d-5 under the Exchange Act)) and its affiliates
from purchasing through such offering Restricted Shares
representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "Permitted
Offering").
(b) The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"),
stating that
(i) they have a good faith intention to commence
promptly a Permitted Offering, and
(ii) the manager in good faith believes that,
based on the then-prevailing market conditions, it will be
able to sell the Registrable Securities at a per share price
equal to at least 80% of the then Fair Market Value of such
shares.
(c) The Registrant (and/or any person designated by
the Registrant) shall thereupon have the option exercisable by
written notice delivered to the Designated Holder within ten
business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price
(the "Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Registrant and
(ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by the
Registrant (or its designee) under Section 11(c) shall take place
at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable
date and time designated by the Registrant and/or such designee
in such notice within twenty business days after delivery of such
notice, and any payment for the shares to be so purchased shall
be made by delivery at the time of such closing in immediately
available funds.
(e) If the Registrant does not elect to exercise its
option pursuant to this Section 11 with respect to all
Registrable Securities, it shall use its best efforts to effect,
as promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that
(i) neither party shall be entitled to demand
more than an aggregate of two effective registration
statements hereunder, and
(ii) the Registrant will not be required to file
any such registration statement during any period of time
(not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and
(C) below) when
(A) the Registrant is in possession of
material non-public information which it reasonably
believes would be detrimental to be disclosed at such
time and, in the opinion of counsel to the Registrant,
such information would be required to be disclosed if a
registration statement were filed at that time;
(B) the Registrant is required under the
Securities Act to include audited financial statements
for any period in such registration statement and such
financial statements are not yet available for
inclusion in such registration statement; or
(C) the Registrant determines, in its
reasonable judgment, that such registration would
interfere with any financing, acquisition or other
material transaction involving the Registrant or any of
its affiliates.
(f) The Registrant shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant
to this Section 11 to be qualified for sale under the securities
or Blue Sky laws of such jurisdictions as the Designated Holder
may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however,
that the Registrant shall not be required to qualify to do
business in, or consent to general service of process in, any
jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section
11 are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to such
holder's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in such
registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 11
shall be effected at the Registrant's expense, except for
underwriting discounts and commissions and the fees and the
expenses of counsel to the Designated Holder, and the Registrant
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from
auditors) as is customary in connection with underwritten public
offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under
this Section 11, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with
the Manager and the other underwriters participating in such
offering, and
(iii) to take all further actions which shall be
reasonably necessary to effect such registration and sale
(including if the Manager deems it necessary, participating
in road-show presentations).
(j) The Registrant shall be entitled to include (at
its expense) additional shares of its common stock in a
registration effected pursuant to this Section 11 only if and to
the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on OPTION GRANTOR contained
in this Agreement or in the Merger Agreement, in the event of any
change in OPTION GRANTOR Common Stock by reason of stock
dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like,
the type and number of shares or securities subject to the OPTION
GRANTOR Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to OPTION
HOLDER its rights hereunder, including the right to purchase from
OPTION GRANTOR (or its successors) shares of OPTION GRANTOR
Common Stock (or such other shares or securities into which
OPTION GRANTOR Common Stock has been so changed) representing the
Option Shares Percentage of the Initial Number of shares of
OPTION GRANTOR Common Stock for the aggregate Exercise Price
calculated as of the date of this Agreement as provided in
Section 1.
13. RESTRICTIVE LEGENDS. Each certificate
representing OPTION GRANTOR Shares issued to OPTION HOLDER
hereunder, and OPTION HOLDER Shares, if any, delivered to OPTION
GRANTOR at a Closing, shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
OPTION HOLDER STOCK OPTION AND TRIGGER PAYMENT AGREEMENT,
DATED AS OF NOVEMBER 10, 1995, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of
the Securities Act and state securities or Blue Sky laws in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if OPTION HOLDER or
OPTION GRANTOR, as the case may be, shall have delivered to
the other party a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such
legend is not required for purposes of the Securities Act or
such laws;
(ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and
(iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are
both satisfied.
In addition, such certificates shall bear any other legend as may
be required by law. Certificates representing shares sold in a
registered public offering pursuant to Section 11 shall not be
required to bear the legend set forth in this Section 13.
14. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Except as expressly provided for in this
Agreement, neither this Agreement nor the rights or obligations
of either party hereto are assignable, except by operation of
law, or with the written consent of the other party.
(c) Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.
(d) Any Restricted Shares sold by a party in
compliance with the provisions of Section 11 shall, upon
consummation of such sale, be free of the restrictions imposed
with respect to such shares by this Agreement, unless and until
such party shall repurchase or otherwise become the beneficial
owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
15. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specified terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which
they are entitled at law or equity.
16. VALIDITY. (a) The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect.
(b) In the event any court or other competent
authority holds any provisions of this Agreement to be null, void
or unenforceable, the parties hereto shall negotiate in good
faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the
extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof.
(c) Subject to Section 5, if for any reason any such
court or regulatory agency determines that OPTION HOLDER is not
permitted to acquire, or OPTION GRANTOR is not permitted to
repurchase pursuant to Section 8, the full number of shares of
OPTION GRANTOR Common Stock provided in Section 1 hereof (as the
same may be adjusted), it is the express intention of OPTION
GRANTOR to allow OPTION HOLDER to acquire or to require OPTION
GRANTOR to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith, or not take any action
required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for
breach hereof or of any other provision of this Agreement or part
hereof as the result of such holding or order.
17. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five days after
being mailed by registered or certified mail (return receipt
requested) to the parties in each case to the following addresses
(or at such other address for a party as shall be specified by
like notice):
A. If to OPTION HOLDER, to:
IES Industries Inc.
IES Tower
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. Stoppelmore
Title: 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
