AGREEMENT AND PLAN OF MERGER
by and among
MIDWEST RESOURCES INC.
and
MIDWEST POWER SYSTEMS INC.
and
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
and
MIDAMERICAN ENERGY COMPANY
Dated as of July 26, 1994
TABLE OF CONTENTS Page
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Effects of the Merger . . . . . . . . . . . . 1
SECTION 1.3 Effective Time of the Merger . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Effect of the Merger on Capital Stock . . . . 2
SECTION 2.2 Exchange of Common Stock Certificates . . . . 5
SECTION 2.3 Exchange of Preferred Stock and Preference
Stock; Certificates Not Required . . . . . . . 8
SECTION 2.4 No Further Ownership Rights in Preferred
Stock or Preference Stock . . . . . . . . . . 8
ARTICLE III
THE CLOSING
SECTION 3.1 Closing . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RESOURCES
AND MIDWEST POWER
SECTION 4.1 Organization and Qualification . . . . . . . . 9
SECTION 4.2 Subsidiaries . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Capitalization . . . . . . . . . . . . . . . . 10
SECTION 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . . . . 11
SECTION 4.5 Reports and Financial Statements . . . . . . . 13
SECTION 4.6 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities . . . . . . . . . . . 14
SECTION 4.7 Litigation . . . . . . . . . . . . . . . . . . 15
-i-
SECTION 4.8 Registration Statement and Proxy Statement . . 15
SECTION 4.9 Tax Matters . . . . . . . . . . . . . . . . . 15
SECTION 4.10 Employee Matters; ERISA . . . . . . . . . . . 19
SECTION 4.11 Environmental Protection . . . . . . . . . . . 22
SECTION 4.12 Regulation as a Utility . . . . . . . . . . . 25
SECTION 4.13 Vote Required . . . . . . . . . . . . . . . . 25
SECTION 4.14 Accounting Matters . . . . . . . . . . . . . . 26
SECTION 4.15 Opinion of Financial Advisor . . . . . . . . . 26
SECTION 4.16 Insurance . . . . . . . . . . . . . . . . . . 26
SECTION 4.17 Ownership of Iowa-Illinois Capital Stock . . . 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IOWA-ILLINOIS
SECTION 5.1 Organization and Qualification . . . . . . . . 27
SECTION 5.2 Subsidiaries . . . . . . . . . . . . . . . . . 27
SECTION 5.3 Capitalization . . . . . . . . . . . . . . . . 28
SECTION 5.4 Authority; Non-Contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . 28
SECTION 5.5 Reports and Financial Statements . . . . . . . 30
SECTION 5.6 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities . . . . . . . . . . . 31
SECTION 5.7 Litigation . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Registration Statement and Proxy Statement . . 32
SECTION 5.9 Tax Matters . . . . . . . . . . . . . . . . . 32
SECTION 5.10 Employee Matters; ERISA . . . . . . . . . . . 35
SECTION 5.11 Environmental Protection . . . . . . . . . . . 39
SECTION 5.12 Regulation as a Utility . . . . . . . . . . . 40
SECTION 5.13 Vote Required . . . . . . . . . . . . . . . . 40
-ii-
SECTION 5.14 Accounting Matters . . . . . . . . . . . . . . 41
SECTION 5.15 Opinion of Financial Advisor . . . . . . . . . 41
SECTION 5.16 Insurance . . . . . . . . . . . . . . . . . . 41
SECTION 5.17 Ownership of Resources Common Stock . . . . . 41
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Covenants of the Parties . . . . . . . . . . . 41
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information . . . . . . . . . . . . 47
SECTION 7.2 Joint Proxy Statement and Registration
Statement . . . . . . . . . . . . . . . . . . 47
SECTION 7.3 Regulatory Approvals and Other Matters . . . . 49
SECTION 7.4 Shareholder Approval . . . . . . . . . . . . . 49
SECTION 7.5 Directors' and Officers' Indemnification . . . 50
SECTION 7.6 Disclosure Schedules . . . . . . . . . . . . . 52
SECTION 7.7 Public Announcements . . . . . . . . . . . . . 53
SECTION 7.8 Rule 145 Affiliates . . . . . . . . . . . . . 53
SECTION 7.9 No Solicitations . . . . . . . . . . . . . . . 53
SECTION 7.10 Expenses . . . . . . . . . . . . . . . . . . . 54
SECTION 7.11 Board of Directors . . . . . . . . . . . . . . 54
SECTION 7.12 Officers . . . . . . . . . . . . . . . . . . 55
SECTION 7.13 Employment Agreements and Workforce Matters . 55
SECTION 7.14 Severance Plan . . . . . . . . . . . . . . . . 56
SECTION 7.15 Post-Merger Operations . . . . . . . . . . . . 56
-iii-
Page
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligations to
Effect the Merger . . . . . . . . . . . . . . 56
SECTION 8.2 Conditions to Obligations of Resources and
Midwest Power to Effect the Merger . . . . . 57
SECTION 8.3 Conditions to Obligations of Iowa-Illinois to
Effect the Merger . . . . . . . . . . . . . . 59
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination . . . . . . . . . . . . . . . . . 61
SECTION 9.2 Effect of Termination . . . . . . . . . . . . 64
SECTION 9.3 Termination Fee; Expenses . . . . . . . . . . 65
SECTION 9.4 Amendment . . . . . . . . . . . . . . . . . . 67
SECTION 9.5 Waiver . . . . . . . . . . . . . . . . . . . . 67
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . 67
SECTION 10.2 Brokers . . . . . . . . . . . . . . . . . . . 67
SECTION 10.3 Notices . . . . . . . . . . . . . . . . . . . 68
SECTION 10.4 Miscellaneous . . . . . . . . . . . . . . . . 69
SECTION 10.5 Interpretation . . . . . . . . . . . . . . . . 69
SECTION 10.6 Counterparts; Effect . . . . . . . . . . . . . 69
SECTION 10.7 Specific Performance . . . . . . . . . . . . . 69
SECTION 10.8 Parties in Interest . . . . . . . . . . . . . 69
SECTION 10.9 Further Assurances . . . . . . . . . . . . . . 70
-iv-
Exhibit A - Articles of Incorporation of the Company
Exhibit B - By-laws of the Company
Exhibit C - Articles of Merger
Exhibit D - Task Forces
Exhibit E - Initial Board Committees
Exhibit F-1 - Employment Agreement With Russell Christiansen
Exhibit F-2 - Employment Agreement With Stanley Bright
Exhibit F-3 - Positions and Duties of Mr. Christiansen and
Mr. Bright
Exhibit G - Severance Plan
-v-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 26, 1994,
("Agreement"), by and among Midwest Resources Inc., an Iowa
corporation ("Resources"), Iowa-Illinois Gas and Electric
Company, an Illinois corporation ("Iowa-Illinois"), Midwest Power
Systems Inc., an Iowa corporation ("Midwest Power") and a
subsidiary of Resources and MidAmerican Energy Company, an Iowa
corporation ("Company"), 50% of whose outstanding capital stock
is owned by Iowa-Illinois and 50% of whose outstanding capital
stock is owned by Resources.
WHEREAS, Resources, Midwest Power and Iowa-Illinois have
determined to engage in a business combination as peer firms in a
merger of equals whereby Iowa-Illinois, Midwest Power and
Resources will be merged with and into the Company, with the
Company as the surviving corporation in such merger ("Merger");
and
WHEREAS, in furtherance thereof, the respective Boards of
Directors of Resources, Midwest Power, Iowa-Illinois and the
Company have approved the Merger of Resources, Midwest Power and
Iowa-Illinois with and into the Company, all upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, for federal income tax purposes, it is intended
that the Merger will be treated as a reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to
the conditions of this Agreement, at the Effective Time (as
defined in Section 1.3), Resources, Midwest Power and Iowa-
Illinois shall be merged with and into the Company in accordance
with the laws of the States of Illinois and Iowa. The Company
shall be the surviving corporation in the Merger and shall
continue its corporate existence under the laws of the State of
Iowa. The effects and the consequences of the Merger shall be as
set forth in Section 1.2.
SECTION 1.2 Effects of the Merger. At the Effective
Time, (i) the Articles of Incorporation of the Company, as in
effect immediately prior to the Effective Time substantially in
the form attached hereto as Exhibit A, shall be the Articles of
Incorporation of the Company as the surviving corporation in the
Merger until thereafter duly amended and (ii) the by-laws of the
Company, as in effect immediately prior to the Effective Time,
substantially in the form attached hereto as Exhibit B, shall be
the by-laws of the Company as the surviving corporation in the
Merger, until thereafter duly amended. Subject to the foregoing,
the additional effects of the Merger shall be as provided in the
applicable provisions of the Iowa Business Corporation Act ("Iowa
Act") and the Illinois Business Corporation Act of 1983
("Illinois Act").
SECTION 1.3 Effective Time of the Merger. On the Closing
Date (as defined in Section 3.1), articles of merger substan-
tially in the form attached hereto as Exhibit C ("Articles of
Merger") complying with the requirements of the Illinois Act and
the Iowa Act shall be executed by Midwest Power, Resources, Iowa-
Illinois and the Company and shall be filed with the Secretary of
State of the State of Illinois and the Secretary of State of the
State of Iowa. The Merger shall become effective at the time
that the parties agree to specify in the Articles of Merger
("Effective Time").
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Effect of the Merger on Capital Stock. At
the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of Iowa-
Illinois, Midwest Power, Resources or the Company:
(a) Cancellation of Certain Common Stock. Each share of
Iowa-Illinois common stock, par value $1.00 per share ("Iowa-
Illinois Common Stock"), and each share of Resources common
stock, no par value ("Resources Common Stock"), that is owned by
Iowa-Illinois or any of its subsidiaries (as defined in Section
4.1) or by Resources or any of its subsidiaries, and each share
of Midwest Power common stock, no par value ("Midwest Power
Common Stock"), shall be cancelled and cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of Certain Common Stock. Each share of
Iowa-Illinois Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares cancelled pursuant
to Section 2.1(a) and shares with respect to which the holder
thereof duly exercises the right to dissent under applicable law)
shall be converted into the right to receive 1.47 shares ("Iowa-
Illinois Conversion Ratio") of Company common stock, no par value
("Company Common Stock"), and each share of Resources Common
Stock issued and outstanding immediately prior to the Effective
Time (other than shares cancelled pursuant to Section 2.1(a) and
shares with respect to which the holder thereof duly exercises
the right to dissent under applicable law) shall be converted
-2-
into the right to receive 1.0 shares ("Resources Conversion
Ratio") of Company Common Stock. Upon such conversions as
provided for herein, each holder of a certificate formerly
representing any such shares of Iowa-Illinois Common Stock or
Resources Common Stock shall cease to have any rights with
respect thereto, except the right to receive the shares of
Company Common Stock to be issued in consideration therefor (and
cash in lieu of fractional shares) upon the surrender of such
certificate in accordance with Section 2.2.
(c) Cancellation of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time shall be cancelled, and no consideration shall
be delivered in exchange therefor.
(d) Cancellation of Certain Preferred Stock and Preference
Stock. Each of the Iowa-Illinois Preferred Shares, par value
$100 per share ("Iowa-Illinois Preferred Stock"), each of the
Iowa-Illinois Preference Shares, without par value ("Iowa-
Illinois Preference Stock"), and each share of Midwest Power
Preferred Stock, no par value ("Midwest Power Preferred Stock"),
that is owned by Iowa-Illinois or any of its subsidiaries or by
Resources or any of its subsidiaries shall be cancelled and cease
to exist, and no consideration shall be delivered in exchange
therefor.
(e) Conversion of Iowa-Illinois Preferred Stock and Iowa-
Illinois Preference Stock. (i) Each issued and outstanding
share of each series of Iowa-Illinois Preferred Stock, other than
shares cancelled pursuant to Section 2.1(d) and shares with
respect to which the holder thereof exercises the right to
dissent, shall be converted into and become one duly authorized,
validly issued, fully paid and nonassessable share of Company
Class I Preferred Stock, par value $100 per share ("Company Class
I Preferred Stock"), of the respective series specified below:
Iowa-Illinois Company Class I
Preferred Stock Preferred Stock
$4.36 Cumulative $4.36 Cumulative
$4.22 Cumulative $4.22 Cumulative
$7.50 Cumulative $7.50 Cumulative
(ii) Each issued and outstanding share of each series of
Iowa-Illinois Preference Stock, other than shares cancelled
pursuant to Section 2.1(d) and shares with respect to which the
holder thereof exercises the right to dissent, shall be converted
into and become one duly authorized, validly issued, fully paid
and nonassessable share of Company Preference Stock, without par
value ("Company Preference Stock"), of the respective series
specified below:
-3-
Iowa-Illinois Company
Preference Stock Preference Stock
$7.80 Series $7.80 Series
$5.25 Series $5.25 Series
(f) Conversion of Midwest Power Preferred Stock. Each
issued and outstanding share of each series of Midwest Power
Preferred Stock, other than shares cancelled pursuant to Section
2.1(d) and shares with respect to which the holder thereof
exercises the right to dissent, shall be converted into and
become one duly authorized, validly issued, fully paid and
nonassessable share of Company Class M Preferred Stock, no par
value ("Company Class M Preferred Stock"), of the respective
series specified below:
Midwest Power Company Class M
Preferred Stock Preferred Stock
$3.30 Series $3.30 Series
$3.75 Series $3.75 Series
$3.90 Series $3.90 Series
$4.20 Series $4.20 Series
$4.35 Series $4.35 Series
$4.40 Series $4.40 Series
$4.80 Series $4.80 Series
$1.7375 Series $1.7375 Series
(g) The Company Class I Preferred Stock, Company Class M
Preferred Stock and Company Preference Stock issued upon
conversion, respectively, of the Iowa-Illinois Preferred Stock,
Midwest Power Preferred Stock and Iowa-Illinois Preference Stock
shall have the preferences, limitations and relative rights which
are described in the Articles of Incorporation of the Company
substantially in the form attached hereto as Exhibit A.
(h) Shares of Dissenting Holders. Any issued and
outstanding shares of Resources Common Stock, Iowa-Illinois
Common Stock, Iowa-Illinois Preferred Stock, Iowa-Illinois
Preference Stock or Midwest Power Preferred Stock held by a
person who objects to the Merger and complies with all applicable
provisions of the Iowa Act or the Illinois Act, as applicable,
concerning the right of such person to dissent from the Merger
and demand appraisal of such shares ("Dissenting Holder") shall
not be converted as described in Section 2.1(b), (e) or (f) but
shall from and after the Effective Time represent only the right
to receive such consideration as may be determined to be due to
such Dissenting Holder with respect to such shares pursuant to
the Iowa Act or the Illinois Act, as applicable; provided,
however, that shares of Resources Common Stock, Iowa-Illinois
Common Stock, Iowa-Illinois Preferred Stock, Iowa-Illinois
Preference Stock or Midwest Power Preferred Stock outstanding
immediately prior to the Effective Time and held by a Dissenting
-4-
Holder who shall, after the Effective Time, withdraw the demand
for appraisal or lose the right of appraisal of such shares
pursuant to the Iowa Act or the Illinois Act, as applicable,
shall be deemed to be converted, as of the Effective Time, into
the right to receive the Company Common Stock, Company Class I
Preferred Stock, Company Class M Preferred Stock or Company
Preference Stock specified in Section 2.1(b), (e), or (f) and
cash in lieu of fractional shares in accordance with Section 2.2,
without interest.
SECTION 2.2 Exchange of Common Stock Certificates.
(a) Deposit with Exchange Agent. As soon as practicable
after the Effective Time, the Company shall deposit with a bank,
trust company or other agent selected by Iowa-Illinois and
Resources ("Exchange Agent") certificates representing shares of
Company Common Stock required to effect the exchanges referred to
in Section 2.1(b).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate or certificates which immediately prior
to the Effective Time represented issued and outstanding shares
of Resources Common Stock or Iowa-Illinois Common Stock
("Certificates") that were converted ("Converted Shares") into
the right to receive shares of Company Common Stock ("Company
Shares") pursuant to Section 2.1(b), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the exchange of Certificates
for certificates representing Company Shares. Upon delivery of a
Certificate to the Exchange Agent for exchange, together with a
duly executed letter of transmittal and such other documents as
the Exchange Agent shall require, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate
representing that number of whole Company Shares and the amount
of cash in lieu of fractional share interests which such holder
has the right to receive pursuant to the provisions of this
Article II. In the event of a transfer of ownership of Converted
Shares which is not registered in the transfer records of Iowa-
Illinois or Resources, a certificate representing the proper
number of Company Shares may be issued to a transferee if the
Certificate representing such Converted Shares is presented to
the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to
the Exchange Agent that any applicable stock transfer taxes have
been paid. Until delivered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such delivery
the certificate representing Company Shares and cash in lieu of
any fractional shares of Company Common Stock as contemplated by
this Section 2.2.
-5-
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the
Effective Time with respect to Company Shares with a record date
after the Effective Time shall be paid to the holder of any
undelivered Certificate with respect to the Company Shares
represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section
2.2(d), until the holder of record of such Certificate (or a
transferee as described in Section 2.2(b)) shall have delivered
such Certificate as contemplated in Section 2.2(b). Subject to
the effect of unclaimed property, escheat and other applicable
laws, following delivery of any such Certificate, there shall be
paid to the record holder (or transferee) of the certificates
representing whole Company Shares issued in exchange therefor,
without interest, (i) at the time of such delivery, the amount of
any cash payable in lieu of a fractional share of Company Common
Stock to which such holder (or transferee) is entitled pursuant
to Section 2.2(d) and the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole Company Shares and
(ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time
but prior to delivery and a payment date subsequent to delivery
payable with respect to such whole Company Shares, as the case
may be.
(d) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Company Common Stock shall be
issued upon the delivery for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a shareholder of the Company.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (x) the
number of full shares of Company Common Stock delivered to the
Exchange Agent by the Company pursuant to Section 2.2(a) over (y)
the aggregate number of full shares of Company Common Stock to be
distributed to holders of Resources Common Stock and Iowa-
Illinois Common Stock pursuant to Section 2.2(b) (such excess
being herein called the "Excess Shares"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent for
the holders of Iowa-Illinois Common Stock and Resources Common
Stock, shall sell the Excess Shares at then prevailing prices on
the New York Stock Exchange ("NYSE"), all in the manner provided
in Section 2.2(d)(iii).
(iii) The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member
firms of the NYSE and shall be executed in round lots to the
extent practicable. Until the net proceeds of such sale or sales
have been distributed to the holders of Iowa-Illinois Common
Stock and Resources Common Stock, the Exchange Agent shall, until
-6-
remitted pursuant to Section 2.2(f), hold such proceeds in trust
for the holders of Iowa-Illinois Common Stock and Resources
Common Stock ("Common Shares Trust"). The Company shall pay all
commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation, of the Exchange
Agent incurred in connection with such sale of the Excess Shares.
The Exchange Agent shall determine the portion of the net
proceeds comprising the Common Shares Trust to which each holder
of Iowa-Illinois Common Stock or Resources Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction the
numerator of which is the amount of the fractional share interest
to which such holder of Iowa-Illinois Common Stock or Resources
Common Stock is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all
holders of Iowa-Illinois Common Stock and Resources Common Stock
are entitled.
(iv) As soon as practicable after the sale of Excess
Shares pursuant to clause (iii) above and the determination of
the amount of cash, if any, to be paid to holders of Iowa-
Illinois Common Stock and Resources Common Stock in lieu of any
fractional share interests, the Exchange Agent shall distribute
such amounts to holders of Iowa-Illinois Common Stock and
Resources Common Stock who have theretofore delivered
Certificates for Iowa-Illinois Common Stock and Resources Common
Stock for exchange pursuant to this Article II.
(e) Closing of Transfer Books. From and after the
Effective Time, the stock transfer books of Iowa-Illinois with
respect to shares of Iowa-Illinois Common Stock, and of Resources
with respect to shares of Resources Common Stock, issued and
outstanding prior to the Effective Time shall be closed and no
transfer of any such shares shall thereafter be made. If, after
the Effective Time, Certificates are presented to the Company,
they shall be cancelled and exchanged for certificates
representing the appropriate number of whole Company Shares and
cash in lieu of fractional shares of Company Common Stock as
provided in this Section 2.2.
(f) Termination of Exchange Agent. Any certificates
representing Company Shares deposited with the Exchange Agent
pursuant to Section 2.2(a) and not exchanged within one year
after the Effective Time pursuant to this Section 2.2 shall be
returned by the Exchange Agent to the Company, which shall there-
after act as Exchange Agent. All funds held by the Exchange
Agent for payment to the holders of undelivered Certificates and
unclaimed at the end of one year from the Effective Time shall be
remitted to the Company, after which time any holder of un-
delivered Certificates shall look as a general creditor only to
the Company for payment of such funds to which such holder may be
due, subject to applicable law. The Company shall not be liable
to any person for such shares or funds delivered to a public
-7-
official pursuant to any applicable abandoned property, escheat
or similar law.
SECTION 2.3 Exchange of Preferred Stock and Preference
Stock; Certificates Not Required. Holders of Iowa-Illinois
Preferred Stock, Midwest Power Preferred Stock and Iowa-Illinois
Preference Stock (other than, in each case, Dissenting Holders
thereof) will automatically become holders of Company Class I
Preferred Stock, Company Class M Preferred Stock or Company
Preference Stock, respectively, in accordance with Section 2.1(e)
and (f), and their certificates which represent shares of Iowa-
Illinois Preferred Stock, Midwest Power Preferred Stock or Iowa-
Illinois Preference Stock, as the case may be, will automatically
represent the shares of Company Class I Preferred Stock, Company
Class M Preferred Stock or Company Preference Stock into which
such shares were converted in the Merger. After the Merger, as
presently outstanding certificates of Iowa-Illinois Preferred
Stock, Midwest Power Preferred Stock and Iowa-Illinois Preference
Stock are presented for transfer, new stock certificates bearing
the name of the Company and the appropriate number of shares of
Company Class I Preferred Stock, Company Class M Preferred Stock
or Company Preference Stock will be issued.
SECTION 2.4 No Further Ownership Rights in Preferred
Stock or Preference Stock. All shares of Company Class I
Preferred Stock, Company Class M Preferred Stock and Company
Preference Stock issued in the Merger upon conversion of shares
of Iowa-Illinois Preferred Stock, Midwest Power Preferred Stock
and Iowa-Illinois Preference Stock, respectively, in accordance
with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Iowa-
Illinois Preferred Stock, Midwest Power Preferred Stock or Iowa-
Illinois Preference Stock, as the case may be, subject, however,
to the obligation of the Company to pay any dividends or make any
other distributions with a record date prior to the Effective
Time which may have been declared or made by Iowa-Illinois on
such shares of Iowa-Illinois Preferred Stock and Iowa-Illinois
Preference Stock or by Midwest Power on such shares of Midwest
Power Preferred Stock, and which remain unpaid at the Effective
Time, and there shall be no further registration of transfers on
the stock transfer books of the Company of the shares of Iowa-
Illinois Preferred Stock, Iowa-Illinois Preference Stock or
Midwest Power Preferred Stock which were outstanding immediately
prior to the Effective Time.
-8-
ARTICLE III
THE CLOSING
SECTION 3.1 Closing. The closing (the "Closing") of the
Merger shall take place at the offices of Sidley & Austin, One
First National Plaza, Chicago, Illinois 60603, at 10:00 A.M.,
local time, on the second business day immediately following the
date on which the last of the conditions set forth in Article
VIII hereof is fulfilled or waived, or at such other time and
date and place as Resources and Iowa-Illinois shall mutually
agree ("Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RESOURCES
AND MIDWEST POWER
Resources and Midwest Power represent and warrant to Iowa-
Illinois as follows:
SECTION 4.1 Organization and Qualification. Resources
and each of its subsidiaries (including Midwest Power) is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, has all requisite
power and authority, and has been duly authorized by all neces-
sary regulatory approvals and orders, to own, lease and operate
its assets and properties and to carry on its business as it is
now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties
makes such qualification necessary other than in such
jurisdictions where the failure to be so qualified and in good
standing will not, when taken together with all other such
failures, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
prospects or the results of operations of Resources and its
subsidiaries taken as a whole or on the consummation of the
transactions contemplated by this Agreement (any such material
adverse effect being hereinafter referred to as a "Resources
Material Adverse Effect"). As used in this Agreement, the term
"subsidiary" of a person shall mean any corporation or other
entity (including partnerships and other business associations)
in which such person directly or indirectly owns at least a
majority of the outstanding voting securities or other equity
interests having the power, under ordinary circumstances, to
elect a majority of the directors, or otherwise to direct the
management and policies, of such corporation or other entity.
SECTION 4.2 Subsidiaries. Section 4.2 of the Resources
Disclosure Schedule (as defined in Section 7.6(a)(i)) sets forth
a description as of the date hereof of all subsidiaries of
-9-
Resources and their joint ventures, including the name of each
such entity, a brief description of the principal line or lines
of business conducted by each such entity and the interest of
Resources and its subsidiaries therein. Except as set forth in
Section 4.2 of the Resources Disclosure Schedule, none of such
entities is a "holding company," a "subsidiary company" of a
holding company, or an "affiliate" of a holding company within
the meaning of Section 2(a)(7), 2(a)(8) or 2(a)(11) of the Public
Utility Holding Company Act of 1935, as amended ("1935 Act"),
respectively. Except as set forth in Section 4.2 of the
Resources Disclosure Schedule, all of the issued and outstanding
shares of capital stock of each subsidiary of Resources are
validly issued, fully paid, nonassessable and free of preemptive
rights, are owned directly or indirectly by Resources free and
clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever ("Liens")
and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, under-
standings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating
Resources or any subsidiary of Resources to issue, deliver or
sell, or cause to be issued, delivered or sold, shares of the
capital stock of any subsidiary of Resources or obligating
Resources or any of its subsidiaries to grant, extend or enter
into any such agreement or commitment. As used in this Agree-
ment, the term "joint venture" of a person shall mean any
corporation or other entity (including partnerships and other
business associations and joint ventures) in which such person or
one or more of its subsidiaries owns an equity interest that is
less than a majority of any class of the outstanding voting
securities or equity of any such entity, other than equity
interests held for passive investment purposes which are less
than 5% of any class of the outstanding voting securities or
equity of any such entity.
SECTION 4.3 Capitalization.
(a) Resources. The authorized capital stock of Resources
consists of 250,000,000 shares of Resources Common Stock and
100,000,000 shares of Resources Preferred Stock, no par value,
none of which are outstanding. As of the close of business on
July 22, 1994, 55,279,734 shares of Resources Common Stock were
issued and outstanding. All of the issued and outstanding shares
of Resources Common Stock are validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth
in Section 4.3(a) of the Resources Disclosure Schedule, there are
no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating Resources or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
-10-
delivered or sold, shares of the capital stock of Resources or
obligating Resources or any of its subsidiaries to grant, extend
or enter into any such agreement or commitment, other than under
the Resources Dividend Reinvestment and Common Stock Purchase
Plan, Resources Employee Stock Purchase Plan, Midwest Power
401(k) Plan for Salaried Employees and Midwest Power 401(k) Plan
for Bargaining Employees.
(b) Midwest Power. The authorized capital stock of Midwest
Power consists of 100,000,000 shares of Midwest Power Common
Stock and 10,000,000 shares of Midwest Power Preferred Stock. As
of the close of business on July 22, 1994, 1,000 shares of
Midwest Power Common Stock were issued and outstanding and
2,717,794 shares of Midwest Power Preferred Stock were issued and
outstanding; Section 4.3(b) of the Resources Disclosure Schedule
lists the numbers of shares of each Series of Midwest Power
Preferred Stock outstanding on the date hereof. All of the
issued and outstanding shares of Midwest Power Common Stock and
Midwest Power Preferred Stock are validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth
in Section 4.3(b) of the Resources Disclosure Schedule, there are
no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating Midwest Power to issue,
deliver or sell, or cause to be issued, delivered or sold, shares
of the capital stock of Midwest Power or obligating Midwest Power
or any of its subsidiaries to grant, extend or enter into any
such agreement or commitment.
(c) No Change in Capital Structure. There has been no
material change in the information set forth in Section 4.3(a) or
4.3(b) between the close of business on July 22, 1994, and the
date hereof.
SECTION 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. Each of Resources and Midwest Power has all
requisite power and authority to enter into this Agreement and,
subject to the applicable Resources Shareholders' Approval and
the applicable Midwest Power Shareholders' Approval (as defined
in Section 4.13) and the applicable Resources Required Statutory
Approvals (as defined in clause (c) below), to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by Resources and Midwest
Power of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of
Resources and Midwest Power, subject to obtaining the applicable
Resources Shareholders' Approval and the Midwest Power
Shareholders' Approval. This Agreement has been duly and validly
executed and delivered by Resources and Midwest Power and,
-11-
assuming the due authorization, execution and delivery hereof by
Iowa-Illinois, constitutes a valid and binding obligation of each
of Resources and Midwest Power enforceable against each of them
in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section
4.4(b) of the Resources Disclosure Schedule, the execution and
delivery of this Agreement by Resources and Midwest Power do not,
and, subject to obtaining the Resources Required Statutory
Approvals, the Resources Shareholders' Approval and the third-
party consents set forth in Section 4.4(b) of the Resources
Disclosure Schedule ("Resources Required Consents"), the
consummation 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 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 result in the creation
of any Lien upon any of the properties or assets (any such
violation, conflict, breach, default, termination, acceleration,
right of termination, cancellation or acceleration, loss or
creation, a "Violation") of Resources or any of its subsidiaries
or of any of their joint ventures pursuant to, any provisions of
(i) the articles of incorporation, by-laws or similar governing
documents of Resources or any of its subsidiaries or of any of
their joint ventures, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any Governmental Authority (as hereinafter defined)
applicable to Resources or any of its subsidiaries or any of
their joint ventures or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which
Resources or any of its subsidiaries or any of their joint
ventures is now a party or by which they or any of their
respective properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such
Violations as would not, in the aggregate, have a Resources
Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or
approval of, any court, governmental or regulatory body (includ-
ing a stock exchange or other self-regulatory body) or authority,
domestic or foreign (each, a "Governmental Authority"), is
necessary for the execution and delivery of this Agreement by
Resources and Midwest Power or the consummation by Resources and
Midwest Power, as the case may be, of the transactions
contemplated hereby, the failure of which to obtain, make or give
would have, in the aggregate, a Resources Material Adverse
Effect, except as described in Section 4.4(c) of the Resources
Disclosure Schedule ("Resources Required Statutory Approvals," it
-12-
being understood that references in this Agreement to "obtaining"
such Resources Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notice;
obtaining such authorizations, consents or approvals; and having
such waiting periods expire as are necessary to avoid a violation
of law).
(d) Compliance. Except as set forth in Sections 4.4(d) or
4.11 of the Resources Disclosure Schedule, or as disclosed in the
Resources SEC Reports (as defined in Section 4.5), neither
Resources nor any of its subsidiaries nor, to the knowledge of
Resources, any of their joint ventures, is in violation of or is
under investigation with respect to, or has been given notice or
been charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without
limitation, any applicable environmental law, ordinance or
regulation) of any Governmental Authority, except for violations
which in the aggregate do not, and insofar as reasonably can be
foreseen will not, have a Resources Material Adverse Effect.
Except as set forth in Sections 4.4(d) or 4.11 of the Resources
Disclosure Schedule, Resources and each of its subsidiaries and
each of their joint ventures has all permits, licenses,
franchises and other governmental authorizations, consents and
approvals (collectively, "Permits") necessary to conduct their
businesses as presently conducted, except those the failure of
which to obtain, in the aggregate do not, and insofar as
reasonably can be foreseen will not, have a Resources Material
Adverse Effect. Except as set forth in Section 4.4(d) of the
Resources Disclosure Schedule, or as disclosed in the Resources
SEC Reports, neither Resources nor any of its subsidiaries nor,
to the knowledge of Resources, any of their joint ventures, is in
breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could
result in a default under, (i) the articles of incorporation,
by-laws or similar governing documents of Resources or such
subsidiary or joint venture or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease,
bond, license, approval or other instrument to which Resources or
such subsidiary or joint venture is a party or by which it is
bound or to which any of its property is subject, except in the
case of clause (ii) above, for breaches, violations and defaults
which in the aggregate do not, and insofar as reasonably can be
foreseen will not, have a Resources Material Adverse Effect.
SECTION 4.5 Reports and Financial Statements. The
filings required to be made by Resources and each of its
subsidiaries under the Securities Act of 1933, as amended
("Securities Act"), the Securities Exchange Act of 1934, as
amended ("Exchange Act"), applicable Iowa, South Dakota and
Nebraska public utility laws and regulations, the Federal Power
Act ("Power Act") and the 1935 Act have been filed with the
Securities and Exchange Commission ("SEC"), the appropriate Iowa,
-13-
South Dakota and Nebraska public utility commissions or the
Federal Energy Regulatory Commission ("FERC"), as the case may
be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements
appertaining thereto, and complied in all material respects with
all applicable requirements of the appropriate act and the rules
and regulations thereunder. Resources has made available to
Iowa-Illinois a true and complete copy of each report, schedule,
registration statement and definitive proxy statement and all
amendments thereto filed by Resources or any of its subsidiaries
with the SEC since January 1, 1991 (as such documents have since
the time of their filing been amended, the "Resources SEC
Reports"). As of their respective dates, the Resources SEC
Reports did not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements
of Resources and Midwest Power included in the Resources SEC
Reports (collectively, the "Resources Financial Statements") have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may
be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q under
the Exchange Act) and fairly present the financial position of
Resources and Midwest Power, as the case may be, as of the dates
thereof and the results of their operations and cash flows for
the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal, recurring audit
adjustments. True, accurate and complete copies of the Articles
of Incorporation of Resources and Midwest Power, as in effect on
the date hereof, and true, accurate and complete copies of the
by-laws of Resources and Midwest Power, as in effect on the date
hereof, are included (or incorporated by reference) in the
Resources SEC Reports.
SECTION 4.6 Absence of Certain Changes or Events; Absence
of Undisclosed Liabilities.
(a) Absence of Certain Changes or Events. Except as set
forth in the Resources SEC Reports or Section 4.6 of the
Resources Disclosure Schedule, since December 31, 1993, Resources
and each of its subsidiaries has conducted its business only in
the ordinary course of business consistent with past practice and
there has not been, and no fact or condition exists which would
have or, insofar as reasonably can be foreseen, could have, a
Resources Material Adverse Effect.
(b) Absence of Undisclosed Liabilities. Neither Resources
nor any of its subsidiaries has any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated corporate
balance sheet, except liabilities, obligations or contingencies
-14-
which are accrued or reserved against in the consolidated
financial statements of Resources and Midwest Power or reflected
in the notes thereto for the year ended December 31, 1993, or
which were incurred after December 31, 1993 in the ordinary
course of business and would not, in the aggregate, have a
Resources Material Adverse Effect.
SECTION 4.7 Litigation. Except as disclosed in the
Resources SEC Reports or as set forth in Sections 4.7 or 4.11 of
the Resources Disclosure Schedule, (i) there are no claims,
suits, actions or proceedings, pending or, to the knowledge of
Resources, threatened, nor are there, to the knowledge of
Resources, any investigations or reviews pending or threatened
against, relating to or affecting Resources or any of its
subsidiaries or any of their joint ventures, (ii) there have not
been any material developments since December 31, 1993 with
respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews and (iii) there are no judgments,
decrees, injunctions, rules or orders of any Governmental
Authority or any arbitrator applicable to Resources or any of its
subsidiaries or any of their joint ventures, which, when taken
together with any other nondisclosures described in clauses (i),
(ii) or (iii), would, or insofar as reasonably can be foreseen
could, have a Resources Material Adverse Effect.
SECTION 4.8 Registration Statement and Proxy Statement.
None of the information supplied or to be supplied by or on
behalf of Resources or Midwest Power for inclusion or incorpora-
tion by reference in (i) the registration statement on Form S-4
to be filed with the SEC by the Company in connection with the
issuance of shares of Company Common Stock, Company Class I
Preferred Stock, Company Class M Preferred Stock and Company
Preference Stock in the Merger ("Registration Statement") will,
at the time the Registration Statement is filed with the SEC and
at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the joint
proxy statement in definitive form relating to the meetings of
Resources, Midwest Power and Iowa-Illinois shareholders to be
held in connection with the Merger ("Joint Proxy Statement")
will, at the dates mailed to shareholders of Resources, Midwest
Power and Iowa-Illinois and at the times of the meetings of such
shareholders to be held in connection with the Merger, include
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Joint Proxy
Statement will comply as to form in all material respects with
the provisions of applicable federal securities law.
SECTION 4.9 Tax Matters. "Taxes," as used in this
Agreement, means any federal, state, county, local or foreign
-15-
taxes, charges, fees, levies, or other assessments, including all
net income, gross income, sales and use, ad valorem, transfer,
gains, profits, excise, franchise, real and personal property,
gross receipts, capital stock, production, business and occupa-
tion, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed
by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes
and any expenses incurred in connection with the determination,
settlement or litigation of any Tax liability. "Tax Return," as
used in this Agreement, means a report, return, or similar
statement or other information required to be supplied to a
governmental entity with respect to Taxes including, without
limitation, where permitted or required, combined or consolidated
returns for any group of entities.
(a) Filing of Timely Tax Returns. Except as set forth in
Section 4.9(a) of the Resources Disclosure Schedule, Resources
and each of its subsidiaries have filed (or will file) all Tax
Returns required to be filed by each of them under applicable
law. All Tax Returns were in all material respects (and, as to
Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b) Payment of Taxes. Resources and each of its
subsidiaries have, within the time and in the manner prescribed
by law, paid (and until the Closing Date will pay within the time
and in the manner prescribed by law) all Taxes that are currently
due and payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. Resources and each of its subsidiaries
have established (and until the Closing Date will maintain) on
their books and records liabilities which adequately reflect its
estimate of the amounts required for federal and state income
taxes in accordance with GAAP.
(d) Tax Liens. There are no material Tax liens upon any
assets of Resources or any of its subsidiaries except liens for
Taxes not yet due.
(e) Withholding Taxes. Resources and each of its
subsidiaries have complied (and until the Closing Date will
comply) in all material respects with the provisions of the Code
relating to the payment and withholding of Taxes, including,
without limitation, the withholding and reporting requirements
under Code 1441 through 1464, 3401 thorough 3406, and 6041
through 6049, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper
governmental authorities all amounts required.
-16-
(f) Extensions of Time for Filing Tax Returns. Except as
disclosed in Section 4.9(f) of the Resources Disclosure Schedule,
neither Resources nor any of its subsidiaries has requested or
been granted any extension of time within which to file any Tax
Return, which Tax Return has not since been timely filed.
(g) Waivers of Statute of Limitations. Except as disclosed
in Section 4.9(g) of the Resources Disclosure Schedule, neither
Resources nor any of its subsidiaries has executed any
outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any
Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. Except as
disclosed in Section 4.9(h) of the Resources Disclosure Schedule,
the statute of limitations for the assessment of all Taxes has
expired for all applicable Tax Returns of Resources and each of
its subsidiaries or those Tax Returns have been examined by the
appropriate taxing authorities for all tax periods ending before
the date hereof, and no deficiency for any Taxes has been
proposed, asserted or assessed against Resources or any of its
subsidiaries that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. Except as
disclosed in Section 4.9(i) of the Resources Disclosure Schedule,
no audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax
Returns of Resources or any of its subsidiaries.
(j) Powers of Attorney. Except as disclosed in Section
4.9(j) of the Resources Disclosure Schedule, no power of attorney
currently in force has been granted by Resources or any of its
subsidiaries concerning any Tax matter.
(k) Tax Rulings. Except as disclosed in Section 4.9(k) of
the Resources Disclosure Schedule, neither Resources nor any of
its subsidiaries has received or requested a Tax Ruling (as
defined below) or entered into a Closing Agreement (as defined
below) with any taxing authority that would have a continuing
effect after the Closing Date. "Tax Ruling," as used in this
Agreement, shall mean a written ruling of a taxing authority
relating to Taxes. "Closing Agreement," as used in this
Agreement, shall mean a written and legally binding agreement
with a taxing authority relating to Taxes.
(l) Availability of Tax Returns. As soon as practicable
after the date hereof, Resources and its subsidiaries will make
available to Iowa-Illinois complete and accurate copies, covering
all years ending on or after December 31, 1989, of (i) all Tax
Returns, and any amendments thereto, filed by Resources or any of
its subsidiaries, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by Resources or any of
its subsidiaries and (iii) any Tax Ruling or request for a Tax
-17-
Ruling applicable to Resources or any of its subsidiaries and any
Closing Agreements entered into by Resources or any of its
subsidiaries.
(m) Tax Sharing Agreements. Except as disclosed in Section
4.9(m) of the Resources Disclosure Schedule, no agreements
relating to allocating or sharing of Taxes exist between or among
Resources and any of its subsidiaries.
(n) Code Section 341(f). Neither Resources nor any of its
subsidiaries has filed (or will file prior to the Closing) a
consent pursuant to Code Section 341(f) or has agreed to have
Code Section 341(f)(2) apply to any disposition of a subsection
(f) asset (as that term is defined in Code Section 341(f)(4),
owned by Resources or any of its subsidiaries.
(o) Code Section 168. Except as set forth in Section
4.9(o) of the Resources Disclosure Schedule, no property of
Resources or any of its subsidiaries is property that Resources
or any such subsidiary or any party to this transaction is or
will be required to treat as being owned by another person
pursuant to the provisions of Code Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or
is "tax-exempt use property" within the meaning of Code Section
168(h).
(p) Code Section 481 Adjustments. Except as set forth in
Section 4.9(p) of the Resources Disclosure Schedule, neither
Resources nor any of its subsidiaries is required to include in
income for any tax period ending after the date hereof any
adjustment pursuant to Code Section 481(a) by reason of a
voluntary change in accounting method initiated by Resources or
any of its subsidiaries, and to the knowledge of Resources the
Internal Revenue Service ("IRS") has not proposed any such
adjustment or change in accounting method.
(q) Acquisition Indebtedness. Except as set forth in
Section 4.9(q) of the Resources Disclosure Schedule, no
indebtedness of Resources or any of its subsidiaries is
"corporate acquisition indebtedness" within the meaning of Code
Section 279(b).
(r) Intercompany Transactions. Except as set forth in
Section 4.9(r) of the Resources Disclosure Schedule, neither
Resources nor any of its subsidiaries has engaged in any
intercompany transactions within the meaning of Treasury
Regulations 1.1502-13 or -14 or Temporary Treasury Regulation
Section 1.1502-13T or -14T for which any income or gain remains
unrecognized as of the close of the last taxable year prior to
the Closing Date, and no excess loss account within the meaning
of Treasury Regulation Sections 1.1502-14, -19 or -32 exists with
respect to Resources or any of its subsidiaries.
-18-
(s) Code Section 280G. Except as set forth in Section
4.9(s) of the Resources Disclosure Schedule, neither Resources
nor any of its subsidiaries is a party to any agreement,
contract, or arrangement that could result, on account of the
transactions contemplated hereunder, separately or in the
aggregate, in the payment of "excess parachute payments" within
the meaning of Code Section 280G.
(t) Consolidated Tax Returns. Neither Resources nor any of
its subsidiaries has ever been a member of an affiliated group of
corporations (within the meaning of Code Section 1504(a)) filing
consolidated returns, other than the affiliated group of which
Resources is the common parent.
(u) NOLs. As of December 31, 1992, Resources and its
subsidiaries had net operating loss carryovers available to
offset future income as set forth in Section 4.9(u) of the
Resources Disclosure Schedule. Section 4.9(u) of the Resources
Disclosure Schedule sets forth the amount of and year of
expiration of each company's net operating loss carryovers.
(v) Credit Carryovers. As of December 31, 1992, Resources
and its subsidiaries had tax credit carryovers available to
offset future tax liability as set forth in Section 4.9(v) of the
Resources Disclosure Schedule. Section 4.9(v) of the Resources
Disclosure Schedule sets forth the amount and year of expiration
of each company's tax credit carryovers.
(w) Code Section 338 Elections. Except as set forth in
Section 4.9(w) of the Resources Disclosure Schedule, no election
under Code Section 338 (or any predecessor provision) has been
made by or with respect to Resources or any of its subsidiaries
or any of their respective assets or properties.
SECTION 4.10 Employee Matters; ERISA.
(a) Benefit Plans. As used in this Section 4.10, "Plan"
shall mean any employee plan, practice, arrangement (including,
without limitation, any employee benefit plan within the meaning
of ERISA Section 3(3), employee pension benefit plan, program,
arrangement or agreement, any health, medical, welfare,
disability, life insurance, bonus, severance pay, and other
employee benefit or fringe benefit plan) maintained by or with
respect to which Resources has any fixed or contingent, direct or
indirect liability; and "Resources Benefit Plan" shall mean any
Plan that provides benefits with respect to employees or former
employees of Resources or any of its subsidiaries. Section
4.10(a) of the Resources Disclosure Schedule contains a true and
complete list of all Plans.
(b) Contributions. Except as set forth in Section 4.10(b)
of the Resources Disclosure Schedule, all material contributions
and other payments required to be made by Resources or any of its
-19-
subsidiaries to any Resources Benefit Plan (or to any person
pursuant to the terms thereof) have been made or the amount of
such contribution or payment obligation has been reflected in the
Resources Financial Statements. Except as set forth in Section
4.10(b) of the Resources Disclosure Schedule, the current value
of all accrued benefits under any Resources Benefit Plan which is
a defined benefit plan did not, as of the date of the most recent
actuarial valuation for such plan, exceed the then current value
of the assets of such plan, based on the actuarial assumptions
set forth in such valuation for calculating the minimum funding
requirements of Code Section 412. Neither Resources nor any
entity which is or ever has been considered as a single employer
together with Resources or Midwest Power pursuant to Section 414
of the Code contributes or has ever contributed to a
multiemployer plan (as defined in Section 3(37) of ERISA) or has
any liability under ERISA Section 4203 or Section 4205 in respect
of any such plan.
(c) Qualification; Compliance. Except as set forth in
Section 4.10(c) of the Resources Disclosure Schedule, each of the
Resources Benefit Plans intended to be "qualified" within the
meaning of Code Section 401(a) has been determined by the IRS to
be so qualified, and, to the knowledge of Resources and any of
its subsidiaries, no circumstances exist that are reasonably
expected by Resources or any of its subsidiaries to result in the
revocation of any such determination. Resources and each of its
subsidiaries is in compliance in all respects with, and each of
the Resources Benefit Plans is and has been operated in all
respects in compliance with the terms thereof and all applicable
laws, rules and regulations governing such plan, including,
without limitation, ERISA and the Code, except for any violations
that would not, or insofar as reasonably can be foreseen, could
not, give rise to a Resources Material Adverse Effect. Except as
set forth in Section 4.10(c) of the Resources Disclosure
Schedule, each Resources Benefit Plan intended to provide for the
deferral of income or the reduction of salary or other compen-
sation is effective to provide such deferral or reduction.
(d) Liabilities. With respect to the Plans individually
and in the aggregate, there are no actions, suits or claims
pending or, to the knowledge of Resources, threatened (other than
routine claims for benefits) and no event has occurred, and, to
the knowledge of Resources and any of its subsidiaries, as of the
date hereof there exists no condition or set of circumstances,
that could subject Resources or any of its subsidiaries to any
liability arising under the Code, ERISA or any other applicable
law (including, without limitation, any liability of any kind
whatsoever, whether direct or indirect, contingent, inchoate or
otherwise, to any such plan or the Pension Benefit Guaranty
Corporation ("PBGC")), or under any indemnity agreement to which
Resources or any of its subsidiaries is subject, which liability,
excluding liability for benefit claims and funding obligations
payable in the ordinary course, would have, or insofar as
-20-
reasonably can be foreseen, could have, a Resources Material
Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 4.10(e)
of the Resources Disclosure Schedule, none of the Resources
Benefit Plans that are "welfare plans," within the meaning of
Section 3(1) of ERISA, provides for any benefits payable to or on
behalf of any employee or director after termination of employ-
ment or service, as the case may be, other than elective
continuation required pursuant to Code Section 4980B or coverage
which expires at the end of the calendar month following such
event, and each such plan that is a "group health plan" (as
defined in Code Section 4980B(g)) has been operated in compliance
with Code Section 4980B at all times, except for any
non-compliance that would not, or insofar as reasonably can be
determined could not, give rise to a Resources Material Adverse
Effect.
(f) Documents Made Available. Resources has made available
to Iowa-Illinois a true and correct copy of each collective
bargaining agreement to which Resources or any of its
subsidiaries is a party or under which Resources or any of its
subsidiaries has obligations and, with respect to each Resources
Benefit Plan, to the extent applicable (i) such plan and summary
plan description (including all amendments to each such
document), (ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all
amendments to each such document), (iv) the most recent
determination of the IRS with respect to the qualified status of
such plan, (v) the most recent actuarial report or valuation, and
(vi) all material employee communications.
(g) Payments Resulting from Mergers. Except as set forth
in Section 4.10(g) of the Resources Disclosure Schedule, (i) the
announcement or consummation of any transaction contemplated by
this Agreement will not (either alone or upon the occurrence of
any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from
Resources or any of its subsidiaries to any officer, employee,
former employee or director thereof or to the trustee under any
"rabbi trust" or similar arrangement that would not have been
paid without regard to such announcement or consummation or (B)
benefit being established or becoming accelerated, vested or
payable under any Resources Benefit Plan and (ii) neither
Resources nor any of its subsidiaries is a party to (A) any
management, employment, deferred compensation, severance
(including any payment, right or benefit resulting from a change
in control), bonus or other contract for personal services with
any officer, director or employee, (B) any consulting contract
with any person who prior to entering into such contract was a
director or officer of Resources or any of its subsidiaries or
(C) any material plan, agreement, arrangement or understanding
similar to the foregoing.
-21-
(h) Labor Agreements. As of the date hereof, except as set
forth in Section 4.10(h) of the Resources Disclosure Schedule,
neither Resources nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any
union or labor organization. To the knowledge of Resources and
its subsidiaries, as of the date hereof, there is no current
union representation question involving employees of Resources or
any of its subsidiaries, nor does Resources nor any of its
subsidiaries know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to
organize any such employees. Except as disclosed in the
Resources SEC Reports or in Section 4.10(h) of the Resources
Disclosure Schedule, (i) there is no unfair labor practice,
employment discrimination or other complaint against Resources or
any of its subsidiaries pending, or, to the knowledge of
Resources or any of its subsidiaries, threatened, which has or
reasonably may be expected by Resources or any of its subsid-
iaries to have, a Resources Material Adverse Effect, (ii) there
is no strike, dispute, slowdown, work stoppage or lockout or
other significant labor controversy pending, or, to the knowledge
of Resources or any of its subsidiaries, threatened, against or
involving Resources or any of its subsidiaries which has or,
insofar as reasonably can be foreseen, could have, a Resources
Material Adverse Effect and (iii) there is no proceeding, claim,
suit, action or governmental investigation pending or, to the
knowledge of Resources or any of its subsidiaries, threatened, in
respect of which any director, officer, employee or agent of
Resources or any of its subsidiaries is or may be entitled to
claim indemnification from Resources or any of its subsidiaries
pursuant to their respective articles of incorporation or by-
laws. Except as set forth in Section 4.10(h) of the Resources
Disclosure Schedule, Resources and its subsidiaries have, to the
knowledge of Resources and its subsidiaries, complied in all
material respects with all laws relating to the employment of
labor, including without limitation any provisions thereof
relating to wages, hours, collective bargaining, and the payment
of social security and similar taxes, and no person has, to the
knowledge of Resources or any of its subsidiaries, asserted that
Resources or any of its subsidiaries is liable in any material
amount for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing.
SECTION 4.11 Environmental Protection.
(a) Compliance. Except as set forth in Section 4.11(a) of
the Resources Disclosure Schedule, Resources and each of its
subsidiaries is in compliance with all applicable Environmental
Laws (as hereinafter defined), except where the failure to be in
compliance would not have a Resources Material Adverse Effect.
Except as set forth in Section 4.11(a) of the Resources
Disclosure Schedule, neither Resources nor any of its
subsidiaries has received any communication (written or oral)
from any person or Governmental Authority that alleges that
-22-
Resources or any of its subsidiaries is not in such compliance
with applicable Environmental Laws, except where the failure to
be in compliance would not have a Resources Material Adverse
Effect.
(b) Environmental Permits. Except as set forth in Section
4.11(b) of the Resources Disclosure Schedule, Resources and each
of its subsidiaries has obtained or has applied for all permits,
registrations and governmental authorizations required under any
Environmental Law (collectively, the "Environmental Permits")
necessary for the construction of its facilities or the conduct
of its operations, and all such permits are in good standing or,
where applicable, a renewal application has been timely filed and
is pending agency approval, and Resources and its subsidiaries
are in material compliance with all terms and conditions of the
Environmental Permits, except where the failure to obtain or be
in compliance with such Environmental Permit would not have a
Resources Material Adverse Effect.
(c) Environmental Claims. Except as set forth in Section
4.11(c) of the Resources Disclosure Schedule, to the best
knowledge of Resources upon diligent review, there is no
Environmental Claim (as hereinafter defined) pending or
threatened (i) against Resources or any of its subsidiaries or
any of their joint ventures, (ii) against any person or entity
whose liability for any Environmental Claim Resources or any of
its subsidiaries or any of their joint ventures has or may have
retained or assumed either contractually or by operation of law
or (iii) against any real or personal property or operations
which Resources or any of its subsidiaries or any of their joint
ventures owns, leases or manages, in whole or in part, which, if
adversely determined, would have in the aggregate a Resources
Material Adverse Effect.
(d) Releases. Except as set forth in Section 4.11(c) of
the Resources Disclosure Schedule or Section 4.11(d) of the
Resources Disclosure Schedule, Resources and each of its
subsidiaries has no knowledge of any Releases (as hereinafter
defined) of any Hazardous Material (as hereinafter defined) that
would be reasonably likely to form the basis of any Environmental
Claim against Resources or any of its subsidiaries or any of
their joint ventures, or against any person or entity whose
liability for any Environmental Claim Resources or any of its
subsidiaries or any of their joint ventures has or may have
retained or assumed either contractually or by operation of law,
except for Releases of Hazardous Materials, the liability for
which would not have, in the aggregate, a Resources Material
Adverse Effect.
(e) Predecessors. Except as set forth in Section 4.11(e)
of the Resources Disclosure Schedule, neither Resources nor any
of its subsidiaries has knowledge, with respect to any
predecessor of Resources or any of its subsidiaries or any of
-23-
their joint ventures, of any Environmental Claim pending or
threatened, or of any Release of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental
Claim, which would have, or which Resources or any of its
subsidiaries reasonably believes would have, a Resources Material
Adverse Effect.
(f) Disclosure. Resources has disclosed to Iowa-Illinois
all material facts which Resources or any of its subsidiaries
reasonably believes form the basis of a Resources Material
Adverse Effect arising from (i) the cost to Resources or any of
its subsidiaries of pollution control equipment (including,
without limitation, upgrades and other modifications to existing
equipment) currently required or known to be required in the
future; (ii) current costs to Resources or any of its subsid-
iaries of remediation or costs to Resources or any of its
subsidiaries of remediation known to be required in the future;
or (iii) any other environmental matter affecting Resources or
any of its subsidiaries which would have, or which Resources or
any of its subsidiaries reasonably believes would have, a
Resources Material Adverse Effect.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all adminis-
trative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation
(written or oral) by any person or entity (including any
Governmental Authority) alleging potential liability
(including, without limitation, potential liability for
enforcement, investigatory costs, cleanup costs, govern-
mental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or
resulting from: (A) the presence, or Release or threatened
Release into the environment, of any Hazardous Materials at
any location, whether or not owned, operated, leased or
managed by Resources or any of its subsidiaries or any of
their joint ventures (for purposes of this Section 4.11), or
by Iowa-Illinois or any of its subsidiaries or any of their
joint ventures (for purposes of Section 5.11); or (B)
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law; or (C) any and all
claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from the presence or Release of any
Hazardous Materials.
(ii) "Environmental Laws" means all federal, state and
local statutes, regulations, ordinances and regulatory
common law or equitable doctrine relating to pollution
control or protection of the environment, human health or
-24-
safety (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata),
including, without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials,
or otherwise relating to the manufacture, generation,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means: (A) any petroleum
or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde
foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated
biphenyls ("PCBs"); and (B) any chemicals, materials or
substances which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any
Environmental Law; and (C) any other chemical, material,
substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a
jurisdiction in which Resources or any of its subsidiaries
or any of their joint ventures operates (for purposes of
this Section 4.11) or in which Iowa-Illinois or any of its
subsidiaries or any of their joint ventures operates (for
purposes of Section 5.11).
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface
water, groundwater or property.
SECTION 4.12 Regulation as a Utility. Midwest Power is
regulated as a public utility in the States of Iowa, South Dakota
and Nebraska. Except as set forth in the preceding sentence,
neither Resources nor any "subsidiary company" or "affiliate" of
Resources is subject to regulation as a public utility or public
service company (or similar designation) by a state in the United
States or any foreign country. As used in this Section 4.12 and
in Section 5.12, the terms "subsidiary company" and "affiliate"
shall have the respective meanings ascribed to them in the 1935
Act. Resources is an exempt holding company under Section
3(a)(1) of the 1935 Act.
SECTION 4.13 Vote Required. The approval by the holders
of a majority of the votes entitled to be cast by all holders of
outstanding shares of (i) Resources Common Stock, voting as a
single class ("Resources Shareholders' Approval"), and (ii)
Midwest Power Preferred Stock, voting as a single class, Midwest
Power Common Stock, voting as a single class, and Midwest Power
Common Stock and Midwest Power Preferred Stock, voting together
as a single class (collectively, "Midwest Power Shareholders'
-25-
Approval") are the only votes of the holders of any class or
series of the capital stock of Resources or Midwest Power
required to approve this Agreement and the transactions
contemplated hereby.
SECTION 4.14 Accounting Matters. Neither Resources,
Midwest Power nor, to their knowledge, any of their affiliates
has taken or agreed to take any action that would prevent the
Company from accounting for the Merger as a pooling of interests
in accordance with GAAP and applicable SEC regulations. As used
in this Agreement, the term "affiliate," except where otherwise
defined herein, shall mean, as to any person, any other person
which directly or indirectly controls, or is under common control
with, or is controlled by, such person. As used in this
definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through
ownership of securities or partnership or other ownership
interest, by contract or otherwise).
SECTION 4.15 Opinion of Financial Advisor. Resources has
received the opinion of PaineWebber Incorporated on July 26,
1994, to the effect that, as of July 26, 1994, the Resources
Conversion Ratio and the consideration to be received by the
holders of Resources Common Stock is fair from a financial point
of view to the holders of Resources Common Stock.
SECTION 4.16 Insurance. Except as set forth in Section
4.16 of the Resources Disclosure Schedule, Resources and each of
its subsidiaries is, and has been continuously since January 1,
1989, insured with financially responsible insurers in such
amounts and against such risks and losses as are customary for
companies conducting the business as conducted by Resources and
its subsidiaries during such time period. Except as set forth in
Schedule 4.16 of the Resources Disclosure Schedule, neither
Resources nor any of its subsidiaries has received any notice of
cancellation or termination with respect to any material
insurance policy of Resources or any of its subsidiaries. The
insurance policies of Resources and each of its subsidiaries are
valid and enforceable policies.
SECTION 4.17 Ownership of Iowa-Illinois Capital Stock.
Resources does not "beneficially own" (as such term is defined in
Rule 13d-3 under the Exchange Act) any shares of Iowa-Illinois
Common Stock, Iowa-Illinois Preferred Stock or Iowa-Illinois
Preference Stock.
-26-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IOWA-ILLINOIS
Iowa-Illinois represents and warrants to Resources and
Midwest Power as follows:
SECTION 5.1 Organization and Qualification. Iowa-
Illinois and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of its state of incorporation, has all requisite power and
authority, and has been duly authorized by all necessary regula-
tory approvals and orders, to own, lease and operate its assets
and properties and to carry on its business as it is now being
conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes
such qualification necessary other than in such jurisdictions
where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), prospects or the results
of operations of Iowa-Illinois and its subsidiaries taken as a
whole or on the consummation of the transactions contemplated by
this Agreement (any such material adverse effect being herein-
after referred to as an "Iowa-Illinois Material Adverse Effect").
SECTION 5.2 Subsidiaries. Section 5.2 of the Iowa-
Illinois Disclosure Schedule (as defined in Section 7.6(a)(ii))
sets forth a description as of the date hereof of all subsid-
iaries of Iowa-Illinois and their joint ventures, including the
name of each such entity, a brief description of the principal
line or lines of business conducted by each such entity and the
interest of Iowa-Illinois and its subsidiaries therein. Except
as set forth in Section 5.2 of the Iowa-Illinois Disclosure
Schedule, none of such entities is a "holding company," a
"subsidiary company" of a holding company or an "affiliate" of a
holding company within the meaning of Section 2(a)(7), 2(a)(8) or
2(a)(11) of the 1935 Act, respectively. Except as set forth in
Section 5.2 of the Iowa-Illinois Disclosure Schedule, all of the
issued and outstanding shares of capital stock of each subsidiary
of Iowa-Illinois are validly issued, fully paid, nonassessable
and free of preemptive rights, are owned directly or indirectly
by Iowa-Illinois free and clear of any Liens, and there are no
outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restric-
tions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument
or other agreement, obligating Iowa-Illinois or any subsidiary of
Iowa-Illinois to issue, deliver or sell, or cause to be issued,
delivered or sold, shares of the capital stock of any subsidiary
of Iowa-Illinois or obligating Iowa-Illinois or any of its
-27-
subsidiaries to grant, extend or enter into any such agreement or
commitment.
SECTION 5.3 Capitalization. (a) The authorized capital
stock of Iowa-Illinois consists of 80,000,000 shares of Iowa-
Illinois Common Stock, 400,000 shares of Iowa-Illinois Preferred
Stock, and 2,386,250 shares of Iowa-Illinois Preference Stock.
As of the close of business on July 22, 1994, (i) 29,491,416
shares of Iowa-Illinois Common Stock were issued and outstanding,
(ii) 198,288 shares of Iowa-Illinois Preferred Stock were issued
and outstanding and 500,000 shares of Iowa-Illinois Preference
Stock were issued and outstanding; Section 5.3 of the Iowa-
Illinois Disclosure Schedule lists the numbers of shares of each
Series of Iowa-Illinois Preferred Stock and Iowa-Illinois
Preference Stock outstanding on the date hereof. All of the
issued and outstanding shares of the capital stock of Iowa-
Illinois are validly issued, fully paid, nonassessable and free
of preemptive rights. Except as set forth in Section 5.3 of the
Iowa-Illinois Disclosure Schedule, there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies
or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement,
obligating Iowa-Illinois or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, shares
of the capital stock of Iowa-Illinois or obligating Iowa-Illinois
or any of its subsidiaries to grant, extend or enter into any
such agreement or commitment other than under the Iowa-Illinois
Dividend Reinvestment Plan, Iowa-Illinois Key Employee
Performance Plan or the Iowa-Illinois Shareholders Rights
Agreement dated as of February 25, 1992 ("Iowa-Illinois
Shareholders Rights Plan").
(b) No Change in Capital Structure. There has been no
material change in the information set forth in Section 5.3(a)
between the close of business on July 22, 1994, and the date
hereof.
SECTION 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. Iowa-Illinois has all requisite power and
authority to enter into this Agreement and, subject to the
applicable Iowa-Illinois Shareholders' Approval (as defined in
Section 5.13) and the applicable Iowa-Illinois Required Statutory
Approvals (as defined in clause (c) below), to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by Iowa-Illinois of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Iowa-Illinois, subject
to obtaining the applicable Iowa-Illinois Shareholders' Approval.
This Agreement has been duly and validly executed and delivered
-28-
by Iowa-Illinois and, assuming the due authorization, execution
and delivery hereof by Resources and Midwest Power, constitutes a
valid and binding obligation of Iowa-Illinois enforceable against
it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section
5.4(b) of the Iowa-Illinois Disclosure Schedule, the execution
and delivery of this Agreement by Iowa-Illinois does not, and,
subject to obtaining the Iowa-Illinois Required Statutory
Approvals, the Iowa-Illinois Shareholders' Approval and the
third-party consents set forth in Section 5.4(b) of the Iowa-
Illinois Disclosure Schedule ("Iowa-Illinois Required Consents"),
the consummation 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
lapse of time or both) under, or result in any Violation by Iowa-
Illinois or any of its subsidiaries or any of their joint
ventures pursuant to, any provisions of (i) the articles of
incorporation, by-laws or similar governing documents of Iowa-
Illinois or any of its subsidiaries or of any of their joint
ventures, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority applicable to Iowa-Illinois or any of
its subsidiaries or any of their joint ventures, or any of their
respective properties or assets, or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or
agreement of any kind to which Iowa-Illinois or any of its
subsidiaries or any of their joint ventures is now a party or by
which they or any of their respective properties or assets may be
bound or affected, excluding from the foregoing clauses (ii) and
(iii) such Violations as would not, in the aggregate, have an
Iowa-Illinois Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or
approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Iowa-Illinois or the
consummation by Iowa-Illinois of the transactions contemplated
hereby, the failure of which to obtain, make or give would have,
in the aggregate, an Iowa-Illinois Material Adverse Effect,
except as described in Section 5.4(c) of the Iowa-Illinois
Disclosure Schedule ("Iowa-Illinois Required Statutory
Approvals," it being understood that references in this Agreement
to "obtaining" such Iowa-Illinois Required Statutory Approvals
shall mean making such declarations, filings or registrations;
giving such notice; obtaining such authorizations, consents or
approvals; and having such waiting periods expire as are
necessary to avoid a violation of law).
(d) Compliance. Except as set forth in Sections 5.4(d) or
5.11 of the Iowa-Illinois Disclosure Schedule, or as disclosed in
the Iowa-Illinois SEC Reports (as defined in Section 5.5),
-29-
neither Iowa-Illinois nor any of its subsidiaries nor, to the
knowledge of Iowa-Illinois or any of its subsidiaries, any of
their joint ventures, is in violation of, or is under
investigation with respect to or has been given notice or been
charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any
Governmental Authority, except for violations which in the
aggregate do not, and insofar as can reasonably be foreseen will
not, have an Iowa-Illinois Material Adverse Effect. Except as
set forth in Sections 5.4(d) or 5.11 of the Iowa-Illinois
Disclosure Schedule, Iowa-Illinois and each of its subsidiaries
and each of their joint ventures has all Permits necessary to
conduct their businesses as presently conducted except those
which the failure to obtain in the aggregate do not, and insofar
as reasonably can be foreseen will not, have an Iowa-Illinois
Material Adverse Effect. Except as set forth in Section 5.4(d)
of the Iowa-Illinois Disclosure Schedule, or as disclosed in the
Iowa-Illinois SEC Reports, neither Iowa-Illinois nor any of its
subsidiaries nor, to the knowledge of Iowa-Illinois, any of their
joint ventures, is in breach or violation of or in default in the
performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third
party, could result in a default under, (i) the articles of
incorporation, by-laws or similar governing documents of Iowa-
Illinois or such subsidiary or joint venture or (ii) any
contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other
instrument to which Iowa-Illinois or such subsidiary or joint
venture is a party or by which it is bound or to which any of its
property is subject, except in the case of clause (ii) above, for
breaches, violations and defaults which in the aggregate do not,
and insofar as reasonably can be foreseen will not, have an Iowa-
Illinois Material Adverse Effect.
SECTION 5.5 Reports and Financial Statements. The
filings required to be made by Iowa-Illinois and each of its
subsidiaries under the Securities Act, the Exchange Act,
applicable Iowa and Illinois public utility laws and regulations,
the Power Act, the 1935 Act and the Atomic Energy Act have been
filed with the SEC, the appropriate Iowa and Illinois public
utility commissions, the FERC or the Nuclear Regulatory
Commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents,
exhibits, amendments and supplements appertaining thereto, and
complied in all material respects with all applicable
requirements of the appropriate act and the rules and regulations
thereunder. Iowa-Illinois has made available to Resources a true
and complete copy of each report, schedule, registration
statement and definitive proxy statement and all amendments
thereto filed by Iowa-Illinois with the SEC since January 1, 1991
(as such documents have since the time of their filing been
amended, the "Iowa-Illinois SEC Reports"). As of their
-30-
respective dates, the Iowa-Illinois SEC Reports did not contain
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of Iowa-
Illinois included in the Iowa-Illinois SEC Reports ("Iowa-
Illinois Financial Statements") have been prepared in accordance
with GAAP (except as may be indicated therein or in the notes
thereto and except with respect to unaudited statements as
permitted by Form 10-Q under the Exchange Act) and fairly present
the financial position of Iowa-Illinois as of the dates thereof
and the results of its operations and cash flows for the periods
then ended, subject, in the case of the unaudited interim finan-
cial statements, to normal, recurring audit adjustments. True,
accurate and complete copies of the Articles of Incorporation and
by-laws of Iowa-Illinois, as in effect on the date hereof, are
included (or incorporated by reference) in the Iowa-Illinois SEC
Reports.
SECTION 5.6 Absence of Certain Changes or Events; Absence
of Undisclosed Liabilities.
(a) Absence of Certain Changes or Events. Except as set
forth in the Iowa-Illinois SEC Reports or Section 5.6 of the
Iowa-Illinois Disclosure Schedule, since December 31, 1993, Iowa-
Illinois and each of its subsidiaries has conducted its business
only in the ordinary course of business consistent with past
practice and there has not been any Iowa-Illinois Material
Adverse Effect, and no fact or condition exists which would have,
or, insofar as reasonably can be foreseen, could have, an Iowa-
Illinois Material Adverse Effect.
(b) Absence of Undisclosed Liabilities. Neither Iowa-
Illinois nor any of its subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent or otherwise)
of a nature required by GAAP to be reflected in a consolidated
corporate balance sheet, except liabilities, obligations or
contingencies which are accrued or reserved against in the
consolidated financial statements of Iowa-Illinois or reflected
in the notes thereto for the year ended December 31, 1993, or
which were incurred after December 31, 1993 in the ordinary
course of business and would not, in the aggregate, have an Iowa-
Illinois Material Adverse Effect.
SECTION 5.7 Litigation. Except as disclosed in the Iowa-
Illinois SEC Reports or as set forth in Sections 5.7 or 5.11 of
the Iowa-Illinois Disclosure Schedule, (i) there are no claims,
suits, actions or proceedings, pending or, to the knowledge of
Iowa-Illinois or its subsidiaries, threatened, nor are there, to
the knowledge of Iowa-Illinois, any investigations or reviews
pending or threatened against, relating to or affecting Iowa-
Illinois or any of its subsidiaries or any of their joint
-31-
ventures, (ii) there have not been any material developments
since December 31, 1993 with respect to such disclosed claims,
suits, actions, proceedings, investigations or reviews and (iii)
there are no judgments, decrees, injunctions, rules or orders of
any Governmental Authority or any arbitrator applicable to Iowa-
Illinois or any of its subsidiaries or any of their joint
ventures, which, when taken together with any other
nondisclosures described in clause (i), (ii) or (iii), would, or
insofar as reasonably can be foreseen could, have an Iowa-
Illinois Material Adverse Effect.
SECTION 5.8 Registration Statement and Proxy Statement.
None of the information supplied or to be supplied by or on
behalf of Iowa-Illinois for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the
Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (ii) the Joint Proxy Statement will,
at the date mailed to shareholders of Resources, Midwest Power
and Iowa-Illinois and at the times of the meetings of such
shareholders to be held in connection with the Merger, include
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Joint Proxy
Statement will comply as to form in all material respects with
the provisions of applicable federal securities law.
SECTION 5.9 Tax Matters.
(a) Filing of Timely Tax Returns. Except as set forth in
Section 5.9(a) of the Iowa-Illinois Disclosure Schedule, Iowa-
Illinois and each of its subsidiaries have filed or will file all
Tax Returns required to be filed by each of them under applicable
law. All Tax Returns were in all material respects (and, as to
Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b) Payment of Taxes. Iowa-Illinois and each of its
subsidiaries have, within the time and in the matter prescribed
by law, paid (and until the Closing Date will pay within the time
and in the manner prescribed by law) all Taxes that are currently
due and payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. Iowa-Illinois and each of its
subsidiaries have established (and until the Closing Date will
maintain) on their books and records liabilities which adequately
reflect its estimate of amounts required for federal and state
income taxes in accordance with GAAP.
-32-
(d) Tax Liens. There are no material Tax liens upon any
assets of Iowa-Illinois or any of its subsidiaries except liens
for Taxes not yet due.
(e) Withholding Taxes. Iowa-Illinois and each of its
subsidiaries have complied (and until the Closing Date will
comply) in all material respects with the provisions of the Code
relating to the payment and withholding of Taxes, including,
without limitation, the withholding and reporting requirements
under Code Section 2 Section 1441 through 1464, 3401 through
3406, and 6041
through 6049, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper
governmental authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Except as
set forth in Section 5.9(f) of the Iowa-Illinois Disclosure
Schedule, neither Iowa-Illinois nor any of its subsidiaries has
requested or been granted any extension of time within which to
file any Tax Return, which Tax Return has not since been timely
filed.
(g) Waivers of Statute of Limitations. Except as set forth
in Section 5.9(g) of the Iowa-Illinois Disclosure Schedule,
neither Iowa-Illinois nor any of its subsidiaries has executed
any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any
Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. Except as set
forth in Section 5.9(h) of the Iowa-Illinois Disclosure Schedule,
the statute of limitations for the assessment of all Taxes has
expired for all applicable Tax Returns of Iowa-Illinois and each
of its subsidiaries or those Tax Returns have been examined by
the appropriate taxing authorities for all tax periods ended
before the date hereof, and no deficiency for any Taxes has been
proposed, asserted or assessed against Iowa-Illinois or any of
its subsidiaries that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. Except as
set forth in Section 5.9(i) of the Iowa-Illinois Disclosure
Schedule, no audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax
Returns of Iowa-Illinois or any of its subsidiaries.
(j) Powers of Attorney. Except as set forth in Section
5.9(j) of the Iowa-Illinois Disclosure Schedule, no power of
attorney currently in force has been granted by Iowa-Illinois or
any of its subsidiaries concerning any Tax matter.
(k) Tax Rulings. Except as set forth in Section 5.9(k) of
the Iowa-Illinois Disclosure Schedule, neither Iowa-Illinois nor
any of its subsidiaries has received or requested a Tax Ruling or
-33-
entered into a Closing Agreement with any taxing authority that
would have a continuing effect after the Closing Date.
(l) Availability of Tax Returns. As soon as practicable
after the date hereof, Iowa-Illinois and its subsidiaries will
make available to Resources and Midwest Power complete and
accurate copies, covering all years ending on or after December
31, 1989, of (i) all Tax Returns, and any amendments thereto,
filed by Iowa-Illinois or any of its subsidiaries, (ii) all audit
reports received from any taxing authority relating to any Tax
Return filed by Iowa-Illinois or any of its subsidiaries and
(iii) any Tax Ruling or request for a Tax Ruling applicable to
Iowa-Illinois or any of its subsidiaries and any Closing
Agreements entered into by Iowa-Illinois or any of its
subsidiaries.
(m) Tax Sharing Agreements. Except as disclosed in Section
5.9(m) of the Iowa-Illinois Disclosure Schedule, no agreements
relating to allocating or sharing of Taxes exist between or among
Iowa-Illinois and any of its subsidiaries.
(n) Code Section 341(f). Neither Iowa-Illinois nor any of
its subsidiaries has filed (or will file prior to the Closing) a
consent pursuant to Code Section 341(f) or has agreed to have
Code Section 341(f)(2) apply to any disposition of a subsection
(f) asset (as that term is defined in Code Section 341(f)(4))
owned by Iowa-Illinois or any of its subsidiaries.
(o) Code Section 168. Except as set forth in Section
5.9(o) of the Iowa-Illinois Disclosure Schedule, no property of
Iowa-Illinois or any of its subsidiaries is property that Iowa-
Illinois or any such subsidiary or any party to this transaction
is or will be required to treat as being owned by another person
pursuant to the provisions of Code Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or
is "tax-exempt use property" within the meaning of Code Section
168(h).
(p) Code Section 481 Adjustments. Except as set forth in
Section 5.9(p) of the Iowa-Illinois Disclosure Schedule, neither
Iowa-Illinois nor any of its subsidiaries is required to include
in income for any tax period ending after the date hereof any
adjustment pursuant to Code Section 481(a) by reason of a
voluntary change in accounting method initiated by Iowa-Illinois
or any of its subsidiaries, and to the knowledge of
Iowa-Illinois, the IRS has not proposed any such adjustment or
change in accounting method.
(q) Acquisition Indebtedness. Except as set forth in
Section 5.9(q) of the Iowa-Illinois Disclosure Schedule, no
indebtedness of Iowa-Illinois or any of its subsidiaries is
"corporate acquisition indebtedness" within the meaning of Code
Section 279(b).
-34-
(r) Intercompany Transactions. Except as set forth in
Section 5.9(r) of the Iowa-Illinois Disclosure Schedule, neither
Iowa-Illinois nor any of its subsidiaries has engaged in any
intercompany transactions within the meaning of Treasury
Regulations 1.1502-13 or - 14 or Temporary Treasury Regulation
Section 1.502-13T or -14T for which any income or gain remains
unrecognized as of the close of the last taxable year prior to
the Closing Date and no excess loss account within the meaning of
Treasury Regulation Section 1.502-14, -19 or -32 exists with
respect to Iowa-Illinois or any of its subsidiaries.
(s) Code Section 280G. Except as set forth in Section
5.9(s) of the Iowa-Illinois Disclosure Schedule, neither
Iowa-Illinois nor any of its subsidiaries is a party to any
agreement, contract, or arrangement that could result, on account
of the transactions contemplated hereunder, separately or in the
aggregate, in the payment of any "excess parachute payments"
within the meaning of the Code Section 280G.
(t) Consolidated Tax Returns. Neither Iowa-Illinois nor
any of its subsidiaries has ever been a member of an affiliated
group of corporations (within the meaning of Code Section
1504(a)) filing consolidated returns, other than the affiliated
group of which Iowa-Illinois is the common parent.
(u) NOLs. As of December 31, 1992, Iowa-Illinois and its
subsidiaries had net operating loss carryovers available to
offset future income as set forth in Section 5.9(u) of the Iowa-
Illinois Disclosure Schedule. Section 5.9(u) of the Iowa-
Illinois Disclosure Schedule sets forth the amount of and year of
expiration of each company's net operating loss carryovers.
(v) Credit Carryovers. As of December 31, 1992, Iowa-
Illinois and its subsidiaries had tax credit carryovers available
to offset future tax liability as set forth in Section 5.9(v) of
the Iowa-Illinois Disclosure Schedule. Section 5.9(v) of the
Iowa-Illinois Disclosure Schedule sets forth the amount and year
of expiration of each company's tax credit carryovers.
(w) Code Section 338 Elections. Except as set forth in
Section 5.9(w) of the Iowa-Illinois Disclosure Schedule, no
election under Code Section 338 (or any predecessor provision)
has been made by or with respect to Iowa-Illinois or any of its
subsidiaries or any of their respective assets or properties.
SECTION 5.10 Employee Matters; ERISA.
(a) Benefit Plans. As used in this Section 5.10, "Plan"
shall mean any employee plan, practice, arrangement (including,
without limitation, any employee benefit plan within the meaning
of ERISA Section 3(3), employee pension benefit plan, program,
arrangement or agreement, any health, medical, welfare,
-35-
disability, life insurance, bonus, severance pay, and other
employee benefit or fringe benefit plan) maintained by or with
respect to which Iowa-Illinois has any fixed or contingent,
direct or indirect liability; and "Iowa-Illinois Benefit Plan"
shall mean any Plan that provides benefits with respect to
employees or former employees of Iowa-Illinois or any of its
subsidiaries. Section 5.10(a) of the Iowa-Illinois Disclosure
Schedule contains a true and complete list of all Plans.
(b) Contributions. Except as set forth in Section 5.10(b)
of the Iowa-Illinois Disclosure Schedule, all material
contributions and other payments required to be made by Iowa-
Illinois or any of its subsidiaries to any Iowa-Illinois Benefit
Plan (or to any person pursuant to the terms thereof) have been
made or the amount of such contribution obligation has been
reflected in the Iowa-Illinois Financial Statements. Except as
set forth in Section 5.10(b) of the Iowa-Illinois Disclosure
Schedule, the current value of all accrued benefits under any
Iowa-Illinois Benefit Plan which is a defined benefit plan did
not, as of the date of the most recent actuarial valuation for
such plan, exceed the then current value of the assets of such
plan, based on the actuarial assumptions set forth in such
valuation for calculating the minimum funding requirements of
Code Section 412. Neither Iowa-Illinois nor any entity which is
or ever has been considered as a single employer together with
Iowa-Illinois pursuant to Section 414 of the Code contributes or
has ever contributed to a multiemployer plan (as defined in
Section 3(37) of ERISA)or has any liability under ERISA Section
4203 or Section 4205 in respect of any such Plan.
(c) Qualification; Compliance. Except as set forth in
Section 5.10(c) of the Iowa-Illinois Disclosure Schedule, each of
the Iowa-Illinois Benefit Plans intended to be "qualified" within
the meaning of Code Section 401(a) has been determined by the IRS
to be so qualified, and, to the knowledge of Iowa-Illinois and
any of its subsidiaries, no circumstances exist that are
reasonably expected by Iowa-Illinois or any of its subsidiaries
to result in the revocation of any such determination.
Iowa-Illinois and each of its subsidiaries is in compliance in
all respects with, and each Iowa-Illinois Benefit Plan is and has
been operated in all respects in compliance with the terms
thereof and all applicable laws, rules and regulations governing
such plan, including, without limitation, ERISA and the Code,
except for any violations that would not, or insofar as can
reasonably be foreseen, could not give rise to an Iowa-Illinois
Material Adverse Effect. Except as set forth in Section 5.10(c)
of the Iowa-Illinois Disclosure Schedule, each Iowa-Illinois
Benefit Plan intended to provide for the deferral of income or
the reduction of salary or other compensation is effective to
provide such deferral or reduction.
(d) Liabilities. Except with respect to the Iowa-Illinois
Severance Plan, the Iowa-Illinois Supplemental Retirement Plan
-36-
for Designated Officers, the Iowa-Illinois Key Employee Sustained
Performance Plan, the Iowa-Illinois Compensation Deferral Plan
for Designated Officers and the Iowa-Illinois Compensation
Deferral Plan for Key Executives, there are no actions, suits or
claims pending or, to the knowledge of Iowa-Illinois, threatened
(other than routine claims for benefits) and no event has
occurred with respect to the Plans individually and in the
aggregate, and, to the knowledge of Iowa-Illinois and any of its
subsidiaries, as of the date hereof there exists no condition or
set of circumstances, that could subject Iowa-Illinois or any of
its subsidiaries to any liability arising under the Code, ERISA
or any other applicable law (including, without limitation, any
liability of any kind whatsoever, whether direct or indirect,
contingent, inchoate or otherwise, to any such plan or the PBGC),
or under any indemnity agreement to which Iowa-Illinois or any of
its subsidiaries is subject, which liability, excluding liability
for benefit claims and funding obligations payable in the
ordinary course, would have, or insofar as reasonably can be
foreseen, could have, an Iowa-Illinois Material Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 5.10(e)
of the Iowa-Illinois Disclosure Schedule, none of the Iowa-
Illinois Benefit Plans that are "welfare plans," within the
meaning of Section 3(1) of ERISA, provides for any benefits
payable to or on behalf of any employee or director after
termination of employment or service, as the case may be, other
than elective continuation required pursuant to Code Section
4980B or coverage which expires at the end of the calendar month
following such event, and each such plan that is a "group health
plan" (as defined in Code Section 4980B(g)) has been operated in
compliance with Code Section 4980B at all times, except for any
non-compliance that would not, or insofar as reasonably can be
determined could not, give rise to an Iowa-Illinois Material
Adverse Effect.
(f) Documents Made Available. Iowa-Illinois has made
available to Resources a true and correct copy of each collective
bargaining agreement to which Iowa-Illinois or any of its
subsidiaries is a party or under which Iowa-Illinois or any of
its subsidiaries has obligations, and with respect to each Iowa-
Illinois Benefit Plan, to the extent applicable (i) such plan and
summary plan description (including all amendments to each such
document), (ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all
amendments to each such document), (iv) the most recent
determination of the IRS with respect to the qualified status of
such plan, (v) the most recent actuarial report or valuation and
(vi) all material employee communications.
(g) Payments Resulting from Mergers. Except as set forth
in Section 5.10(g) of the Iowa-Illinois Disclosure Schedule, (i)
the announcement or consummation of any transaction contemplated
by this Agreement will not (either alone or upon the occurrence
-37-
of any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from
Iowa-Illinois or any of its subsidiaries to any officer,
employee, former employee or director thereof or to the trustee
under any "rabbi trust" or similar arrangement that would not
have been paid without regard to such announcement or
consummation or (B) benefit established or becoming accelerated,
vested or payable under any Iowa-Illinois Benefit Plan and (ii)
neither Iowa-Illinois nor any of its subsidiaries is a party to
(A) any management, employment, deferred compensation, severance
(including any payment, right or benefit resulting from a change
in control), bonus or other contract for personal services with
any officer, director or employee, (B) any consulting contract
with any person who prior to entering into such contract was a
director or officer of Iowa-Illinois or any of its subsidiaries
or (C) any material plan, agreement, arrangement or understanding
similar to any of the foregoing.
(h) Labor Agreements. As of the date hereof, except as set
forth in Section 5.10(h) of the Iowa-Illinois Disclosure
Schedule, neither Iowa-Illinois nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor
agreement with any union or labor organization. To the knowledge
of Iowa-Illinois and any of its subsidiaries, as of the date
hereof, except as set forth in Section 5.10(h) of the
Iowa-Illinois Disclosure Statement, there is no current union
representation question involving employees of Iowa-Illinois or
any of its subsidiaries, nor does Iowa-Illinois know of any
activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such
employees. Except as disclosed in the Iowa-Illinois SEC Reports
or in Section 5.10(h) of the Iowa-Illinois Disclosure Schedule,
(i) there is no unfair labor practice, employment discrimination
or other complaint against Iowa-Illinois or any of its
subsidiaries pending, or, to the knowledge of Iowa-Illinois or
any of its subsidiaries, threatened, which has or reasonably may
be expected by Iowa-Illinois or any of its subsidiaries to have
an Iowa-Illinois Material Adverse Effect, (ii) there is no
strike, dispute, slowdown, work stoppage or lockout or other
significant labor controversy, pending, or, to the knowledge of
Iowa-Illinois or any of its subsidiaries, threatened, against or
involving Iowa-Illinois or any of its subsidiaries which has or,
insofar as reasonably can be foreseen, could have, an
Iowa-Illinois Material Adverse Effect and (iii) there is no
proceeding, claim, suit, action or governmental investigation
pending or, to the knowledge of Iowa-Illinois or any of its
subsidiaries, threatened, in respect of which any director,
officer, employee or agent of Iowa-Illinois or any of its
subsidiaries is or may be entitled to claim indemnification from
Iowa-Illinois or any of its subsidiaries pursuant to their
respective charters or by-laws. Except as set forth in Section
5.10(h) of the Iowa-Illinois Disclosure Schedule, Iowa-Illinois
and its subsidiaries have, to the knowledge of Iowa-Illinois and
its subsidiaries, complied in all material respects with all laws
-38-
relating to the employment of labor, including without limitation
any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes,
and no person has, to the knowledge of Iowa-Illinois or any of
its subsidiaries, asserted that Iowa-Illinois or any of its
subsidiaries is liable in any material amount for any arrears of
wages or any taxes or penalties for failure to comply with any of
the foregoing.
SECTION 5.11 Environmental Protection.
(a) Compliance. Except as set forth in Section 5.11(a) of
the Iowa-Illinois Disclosure Schedule, Iowa-Illinois and each of
its subsidiaries is in compliance with all applicable
Environmental Laws, except where the failure to be in compliance
would not have an Iowa-Illinois Material Adverse Effect. Except
as set forth in Section 5.11(a) of the Iowa-Illinois Disclosure
Schedule, neither Iowa-Illinois nor any of its subsidiaries has
received any communication (written or oral) from any person or
Governmental Authority, that alleges that Iowa-Illinois or any of
its subsidiaries is not in such compliance with applicable
Environmental Laws, except where the failure to be in compliance
would not have an Iowa-Illinois Material Adverse Effect.
(b) Environmental Permits. Except as set forth in Section
5.11(b) of the Iowa-Illinois Disclosure Schedule, Iowa-Illinois
and each of its subsidiaries has obtained or has applied for all
Environmental Permits necessary for the construction of its
facilities or the conduct of its operations, and all such permits
are in good standing or, where applicable, a renewal application
has been timely filed and is pending agency approval, and Iowa-
Illinois and its subsidiaries are in material compliance with all
terms and conditions of the Environmental Permits, except where
the failure to obtain or be in compliance with the Environmental
Permit would not have an Iowa-Illinois Material Adverse Effect.
(c) Environmental Claims. Except as set forth in Section
5.11(c) of the Iowa-Illinois Disclosure Schedule, to the best
knowledge of Iowa-Illinois and each of its subsidiaries upon
diligent review, there is no Environmental Claim pending or
threatened (i) against Iowa-Illinois or any of its subsidiaries
or any of their joint ventures, (ii) against any person or entity
whose liability for any Environmental Claim Iowa-Illinois or any
of its subsidiaries or any of their joint ventures has or may
have retained or assumed either contractually or by operation of
law or (iii) against any real or personal property or operations
which Iowa-Illinois or any of its subsidiaries or any of their
joint ventures owns, leases or manages, in whole or in part,
which if adversely determined, would have in the aggregate an
Iowa-Illinois Material Adverse Effect.
(d) Releases. Except as set forth in Section 5.11(c) of
the Iowa-Illinois Disclosure Schedule or Section 5.11(d) of the
-39-
Iowa-Illinois Disclosure Schedule, Iowa-Illinois and each of its
subsidiaries has no knowledge of any Releases of any Hazardous
Material that would be reasonably likely to form the basis of any
Environmental Claim against Iowa-Illinois or any of its
subsidiaries or any of their joint ventures, or against any
person or entity whose liability for any Environmental Claim
Iowa-Illinois or any of its subsidiaries or any of their joint
ventures has or may have retained or assumed either contractually
or by operation of law, except for Releases of Hazardous
Materials, the liability for which would not have, in the
aggregate, an Iowa-Illinois Material Adverse Effect.
(e) Predecessors. Except as set forth in Section 5.11(e)
of the Iowa-Illinois Disclosure Schedule, neither Iowa-Illinois
nor any of its subsidiaries has knowledge, with respect to any
predecessor of Iowa-Illinois or any of its subsidiaries or any of
their joint ventures, of any Environmental Claim pending or
threatened, or of any Release of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental
Claim, which would have, or which Iowa-Illinois or any of its
subsidiaries reasonably believes would have, an Iowa-Illinois
Material Adverse Effect.
(f) Disclosure. Iowa-Illinois has disclosed to Resources
all material facts which Iowa-Illinois reasonably believes form
the basis of an Iowa-Illinois Material Adverse Effect arising
from (i) the cost of Iowa-Illinois pollution control equipment
(including, without limitation, upgrades and other modifications
to existing equipment) currently required or known to be required
in the future; (ii) current Iowa-Illinois remediation costs or
Iowa-Illinois remediation costs known to be required in the
future; or (iii) any other environmental matter affecting Iowa-
Illinois which would have, or which Iowa-Illinois or any of its
subsidiaries reasonably believes would have, an Iowa-Illinois
Material Adverse Effect.
SECTION 5.12 Regulation as a Utility. Iowa-Illinois is
regulated as a public utility in the States of Iowa and Illinois
and in no other state. Neither Iowa-Illinois nor any "subsidiary
company" or "affiliate" of Iowa-Illinois is subject to regulation
as a public utility or public service company (or similar
designation) by any other state in the United States or any
foreign country. Iowa-Illinois is not a holding company under
the 1935 Act.
SECTION 5.13 Vote Required. The approval by the holders
of two-thirds of the votes entitled to be cast by all holders of
outstanding shares of (i) Iowa-Illinois Preferred Stock, voting
as a single class, (ii) Iowa-Illinois Preference Stock, voting as
a single class, (iii) Iowa-Illinois Common Stock, voting as a
single class, and (iv) Iowa-Illinois Preferred Stock, Iowa-
Illinois Preference Stock and Iowa-Illinois Common Stock, voting
together as a single class (collectively, "Iowa-Illinois
-40-
Shareholders' Approval") are the only votes of holders of any
class or series of the capital stock of Iowa-Illinois required to
approve this Agreement and the transactions contemplated hereby.
SECTION 5.14 Accounting Matters. Neither Iowa-Illinois
nor, to its knowledge, any of its affiliates has taken or agreed
to take any action that would prevent the Company from accounting
for the Merger as a pooling of interests in accordance with GAAP
and applicable SEC regulations.
SECTION 5.15 Opinion of Financial Advisor. Iowa-Illinois
has received the opinion of Dillon, Read & Co. Inc. on July 26,
1994, to the effect that, as of July 26, 1994, the Iowa-Illinois
Conversion Ratio and consideration to be received by the holders
of the Iowa-Illinois Common Stock is fair from a financial point
of view to the holders of Iowa-Illinois Common Stock.
SECTION 5.16 Insurance. Except as set forth on Section
5.16 of the Iowa-Illinois Disclosure Schedule, Iowa-Illinois and
each of its subsidiaries is, and has been continuously since
January 1, 1989, insured with financially responsible insurers in
such amounts and against such risks and losses as are customary
for companies conducting the business as conducted by Iowa-
Illinois and its subsidiaries during such time period. Except as
set forth on Schedule 5.16 of the Iowa-Illinois Disclosure
Schedule, neither Iowa-Illinois nor any of its subsidiaries has
received any notice of cancellation or termination with respect
to any material insurance policy of Iowa-Illinois or any of its
subsidiaries. The insurance policies of Iowa-Illinois and each
of its subsidiaries are valid and enforceable policies.
SECTION 5.17 Ownership of Resources Common Stock. Iowa-
Illinois does not "beneficially own" (as such term is defined in
Rule 13d-3 under the Exchange Act) any shares of Resources Common
Stock.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Covenants of the Parties. From and after the
date hereof, and prior to the Effective Time or earlier
termination of this Agreement, Resources and Iowa-Illinois each
agrees as to itself and its subsidiaries, except as expressly
contemplated or permitted in this Agreement, or to the extent the
other parties hereto shall otherwise consent in writing:
(a) Ordinary Course of Business. Each party hereto shall,
and shall cause its respective subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and use
-41-
all commercially reasonable efforts to preserve intact their
present business organizations and goodwill, preserve the
goodwill and relationships with customers, suppliers and others
having business dealings with them and, subject to prudent
management of workforce needs and ongoing or planned programs
relating to downsizing, re-engineering and similar matters, keep
available the services of their present officers and employees to
the end that their goodwill and ongoing businesses shall not be
impaired in any material respect at the Effective Time.
(b) Dividends. No party shall, nor shall any party permit
any of its subsidiaries to: (i) declare or pay any dividends on
or make other distributions in respect of any of their capital
stock other than (A) to such party or its wholly-owned subsid-
iaries, (B) dividends on Midwest Power Common Stock held by
Resources, (C) dividends required to be paid on any series of
Iowa-Illinois Preferred Stock, Iowa-Illinois Preference Stock or
Midwest Power Preferred Stock in accordance with the respective
terms thereof, (D) regular quarterly dividends on Resources
Common Stock with usual record and payment dates not in excess of
100% of the average quarterly dividend for the four quarterly
dividend payments immediately preceding the date hereof with
respect thereto and (E) regular quarterly dividends on
Iowa-Illinois Common Stock with usual record and payment dates
not in excess of 100% of the average quarterly dividend for the
four quarterly dividend payments immediately preceding the date
hereof with respect thereto; (ii) split, combine or reclassify
any of their capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock; or (iii) redeem,
repurchase or otherwise acquire any shares of their capital stock
other than redemptions, repurchases and other acquisitions of
shares of capital stock in the ordinary course of business
including, without limitation, repurchases, redemptions and other
acquisitions in connection with employee benefit plans or in
accordance with the terms of securities issued and outstanding on
the date hereof or hereafter issued in accordance with Section
6.1(c).
(c) Issuance of Securities. Except as described on
Schedule 6.1(c) of the Resources and Iowa-Illinois Disclosure
Schedules, no party shall, nor shall any party permit any of its
subsidiaries to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of their capital
stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire,
any such shares or convertible or exchangeable securities, other
than (i) the issuance of common stock or stock appreciation or
similar rights, as the case may be, pursuant to (x) the
Iowa-Illinois Dividend Reinvestment and Share Purchase Plan, the
Iowa-Illinois Key Employee Sustained Performance Plan or the
Iowa-Illinois Shareholders Rights Plan, and (y) Resources
Dividend Reinvestment and Stock Purchase Plan, Resources Employee
Stock Purchase Plan, Midwest Power 401(k) Plan for Salaried
-42-
Employees or Midwest Power 401(k) Plan for Bargaining Employees,
in each case consistent in kind and amount with past practice and
in the ordinary course of business under such plans in accordance
with their present terms, (ii) issuances by a wholly-owned
subsidiary of its capital stock to its parent, (iii) issuance and
reservation of the Iowa-Illinois Common Stock pursuant to the
Iowa-Illinois Shareholders Rights Plan, and (iv) issuance and
reservation of Resources Common Stock pursuant to any rights plan
adopted pursuant to Section 6.1(i).
(d) Charter Documents. Except as set forth in Section
6.1(d) of the Resources Disclosure Schedule or the Iowa-Illinois
Disclosure Schedule, no party shall amend or propose to amend its
respective articles of incorporation or by-laws, except as
contemplated herein, in any way adverse to the other party.
(e) Acquisitions. Except (i) as set forth in Section
6.1(e) of the Resources Disclosure Schedule or the Iowa-Illinois
Disclosure Schedule, and (ii) acquisitions not exceeding $15
million in the aggregate in the case of, on the one hand,
Resources and Midwest Power and, on the other hand,
Iowa-Illinois, no party shall, nor shall any party permit any of
its subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets in each case
which are material, individually or in the aggregate, to such
party and its subsidiaries taken as a whole.
(f) No Dispositions. Except as disclosed on Schedule
6.1(f) to the Resources or Iowa-Illinois Disclosure Schedule and
other than (i) dispositions not exceeding $15 million in the
aggregate, in the case of, on the one hand, Resources and Midwest
Power and, on the other hand, Iowa-Illinois, which dispositions
do not, individually or in the aggregate, have a Resources
Material Adverse Effect or an Iowa-Illinois Material Adverse
Effect, as the case may be, (ii) as may be required by law to
consummate the transactions contemplated hereby or (iii) in the
ordinary course of business consistent with prior practice, no
party shall, nor shall any party permit any of its subsidiaries
to, sell, lease, license, encumber or otherwise dispose of, any
of its assets which are material, individually or in the
aggregate, to such party and its subsidiaries taken as a whole.
(g) Indebtedness. Except as disclosed in Section 6.1(g) of
the Resources Disclosure Schedule and the Iowa-Illinois
Disclosure Schedule and as otherwise contemplated by this
Agreement, no party shall, nor shall any party permit any of its
subsidiaries to, incur or guarantee any indebtedness (including
any debt borrowed or guaranteed or otherwise assumed, including,
without limitation, the issuance of debt securities or warrants
or rights to acquire debt) other than (i) short-term and
-43-
long-term indebtedness and guarantees incurred in the ordinary
course of business consistent with past practice (such as
refinancings, the issuance of commercial paper or the use of
existing credit facilities); (ii) long-term indebtedness not
aggregating more than (x) in the case of Resources and its
subsidiaries, $60 million and (y) in the case of Iowa-Illinois
and its subsidiaries, $60 million.
(h) Rights Plans. Nothing contained herein shall be deemed
to prohibit Resources from adopting a shareholder rights plan,
provided that (i) no such plan shall prohibit the transactions
contemplated hereby, be "triggered" by the transactions
contemplated hereby, or otherwise have an Iowa-Illinois Material
Adverse Effect or a Resources Material Adverse Effect or
materially change the number of outstanding equity securities of
Resources at the Effective Time and (ii) any such rights plan
shall provide that any rights or other securities issued
thereunder or pursuant thereto shall, at the Effective Time and
without further action by any of the parties or any affiliates
thereof, be redeemed at an aggregate redemption price not in
excess of $600,000 and shall thereafter not be outstanding. If
any such rights plan is adopted, nothing herein shall be deemed
to prohibit Resources from redeeming the rights issued
thereunder.
(i) Compensation, Benefits. Except as disclosed in Section
6.1(i) of the Resources Disclosure Schedule and Iowa-Illinois
Disclosure Schedule, no party shall, nor shall any party permit
any of its subsidiaries to, (i) enter into, adopt or amend
(except as may be required by applicable law), or increase the
amount or accelerate the payment or vesting of any benefit or
amount payable under, any employee benefit plan or other
contract, agreement, commitment, arrangement, plan or policy
maintained by, contributed to or entered into by such party or
any of its subsidiaries, or increase, or enter into any contract,
agreement, commitment or arrangement to increase in any manner,
the compensation or fringe benefits, or otherwise to extend,
expand or enhance the engagement, employment or any related
rights, of any director, officer or other employee of such party
or any of its subsidiaries, except pursuant to binding legal
commitments and except for normal or promotional increases in the
ordinary course of business consistent with past practice that,
in the aggregate, do not result in a material increase in
benefits or compensation expense to such party or any of its
subsidiaries or (ii) enter into or amend any employment,
severance, special pay arrangement with respect to termination of
employment or other similar contract, agreement or arrangement
with any director or officer other than in the ordinary course of
business consistent with past practice.
(j) 1935 Act. No party shall, nor shall any party permit
any of its subsidiaries to, except as required or contemplated by
this Agreement, engage in any activities which would cause a
change in its status, or that of its subsidiaries, under the 1935
Act, or that would impair the ability of Resources or Iowa-
-44-
Illinois, respectively, to claim an exemption as of right under
Rule 2 under the 1935 Act.
(k) Accounting. No party shall, nor shall any party permit
any of its subsidiaries to, make any changes in their accounting
methods, except as required by law, rule, regulation or GAAP.
(l) Pooling. No party shall, nor shall any party permit
any of its subsidiaries to, take any actions which would, or
would be reasonably likely to, prevent the Company from
accounting for the Merger as a pooling of interests in accordance
with GAAP and applicable SEC regulations.
(m) Tax-Free Status. No party shall, nor shall any party
permit any of its subsidiaries to, take any actions which would,
or would be reasonably likely to, adversely affect the status of
the Merger as a reorganization under Code Section 368.
(n) Cooperation, Notification. Each party shall: (i)
confer on a regular and frequent basis with one or more repre-
sentatives of each other party to discuss the general status of
its ongoing operations; (ii) promptly notify each other party of
any significant changes in its business, properties, assets,
condition (financial or other) or results of operations; (iii)
advise each other party of any change or event which has had or,
insofar as reasonably can be foreseen, is reasonably likely to
result in, a Resources Material Adverse Effect or an
Iowa-Illinois Material Adverse Effect, as the case may be; and
(iv) promptly provide each other party with copies of all filings
made by such party or any of its subsidiaries with any state or
federal court, administrative agency, commission or other
Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
(o) Rate Matters. Other than currently pending rate
filings, each party shall, and shall cause its subsidiaries to,
discuss with each other party any changes in its or its
subsidiaries' regulated rates or charges (other than pass-through
fuel and gas rates or charges), standards of service or
accounting from those in effect on the date hereof and consult
with the other parties prior to making any filing (or any
amendment thereto), or effecting any agreement, commitment,
arrangement or consent, whether written or oral, formal or
informal, with respect thereto, and no party will make any filing
to change its rates on file with the public utility commission of
any state or FERC that would have a material adverse effect on
the benefits associated with the business combination provided
herein.
(p) Third-Party Consents. Resources shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to
obtain all Resources Required Consents. Resources shall promptly
notify Iowa-Illinois of any failure or anticipated failure to
obtain any such consents and, if requested by Iowa-Illinois,
-45-
shall provide copies of all Resources Required Consents obtained
by Resources to Iowa-Illinois. Iowa-Illinois shall, and shall
cause its subsidiaries to, use all commercially reasonable
efforts to obtain all Iowa-Illinois Required Consents.
Iowa-Illinois shall promptly notify Resources of any failure or
anticipated failure to obtain any such consents and, if requested
by Resources, shall provide copies of all Iowa-Illinois Required
Consents obtained by Iowa-Illinois to Resources.
(q) No Breach, Etc. No party shall, nor shall any party
permit any of its subsidiaries to, take any action that would or
is reasonably likely to result in a material breach of any
provision of this Agreement or in any of its representations and
warranties set forth in this Agreement being untrue on and as of
the Closing Date.
(r) Tax-Exempt Status. No party shall, nor shall any party
permit any subsidiary to, take any action that would likely
jeopardize the qualification of the outstanding revenue bonds
issued for the benefit of Iowa-Illinois or for the benefit of
Midwest Power which qualify on the date hereof under Code Section
142(a) as "exempt facility bonds" or as tax-exempt industrial
development bonds under Section 103(b)(4) of the Internal Revenue
Code of 1954, as amended prior to the Tax Reform Act of 1986.
(s) Transition Management. The parties shall create two
special transition management task forces ("Task Forces"), a
"Diversified Industries Task Force" and a "Corporate/Utility Task
Force". The composition of the Task Forces shall be as indicated
on Exhibit D attached hereto. The Task Forces shall examine
various alternatives regarding the manner in which to best
organize and manage the business of the Company after the
Effective Time. Don Heppermann will manage and be responsible
for the day-to-day activities and operations of the Diversified
Industries Task Force and Richard Engle shall manage and be
responsible for the day-to-day activities and operations of the
Corporate/Utility Task Force.
(t) Insurance. Each party shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance
companies insurance in such amounts and against such risks and
losses as are customary for companies engaged in the electric and
gas utility industry and employing methods of generating electric
power and fuel sources similar to those methods employed and
fuels used by such party or such party's subsidiaries.
(u) Permits. Each party shall, and shall cause its
subsidiaries to, use reasonable efforts to maintain in effect all
existing Permits pursuant to which such party or such party's
subsidiaries operate.
(v) Certain Information Relating to Commercial and
Industrial Customers. No party shall, nor shall any party permit
-46-
any of its subsidiaries to, use any Evaluation Material (as
defined in the Confidentiality and Standstill Agreement,
effective June 5, 1994, between Resources and Iowa-Illinois
("Confidentiality Agreement")) in connection with any
solicitation, inquiry, proposal, arrangement, understanding or
agreement with any person relating to the provision of electric
or gas utility service by Iowa-Illinois or any of its
subsidiaries, on the one hand, or Resources or any of its
subsidiaries, on the other hand, to commercial and industrial
customers in the service territory of the other party.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information. Upon reasonable
notice, each party shall, and shall cause its subsidiaries to,
afford to the officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other
representatives of the other (collectively, "Representatives")
reasonable access, during normal business hours throughout the
period prior to the Effective Time, to all of its properties,
books, contracts, commitments, forecasts, plans and records
(including, but not limited to, Tax Returns) and, during such
period, each party shall, and shall cause its subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule
and other document filed or received by it or any of its
subsidiaries pursuant to the requirements of federal or state
securities laws or filed with the SEC, the FERC, the public
utility commission of any State, the Nuclear Regulatory
Commission, the Department of Justice, the Federal Trade
Commission, or any other federal or state regulatory agency or
commission, and (ii) all information concerning themselves, their
subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably requested by the other party in
connection with any filings, applications or approvals required
or contemplated by this Agreement. Each party shall, and shall
cause its subsidiaries and Representatives to, hold in strict
confidence all documents and information concerning the other
furnished to it in connection with the transactions contemplated
by this Agreement in accordance with the Confidentiality
Agreement.
SECTION 7.2 Joint Proxy Statement and Registration
Statement.
(a) Preparation and Filing. The parties will prepare and
file with the SEC as soon as reasonably practicable after the
date hereof the Registration Statement and the Joint Proxy
Statement (together, the "Joint Proxy/Registration Statement").
The parties hereto shall each use reasonable efforts to cause the
Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such filing. The
-47-
Company shall also take such action as may be reasonably required
to cause the shares of the Company Class I Preferred Stock,
Company Class M Preferred Stock, Company Preference Stock and the
Company Common Stock issuable in connection with the Merger to be
registered or to obtain an exemption from registration under
applicable state "blue sky" or securities laws; provided,
however, that the Company shall not be required to register or
qualify as a foreign corporation or to take other action which
would subject it to service of process in any jurisdiction where
it will not be, following the Merger, so subject. Each of the
parties hereto shall furnish all information concerning itself
which is required or customary for inclusion in the Joint
Proxy/Registration Statement. The Company shall use its best
efforts to cause the shares of the Company Common Stock issuable
in the Merger to be approved for listing on the NYSE upon
official notice of issuance. The information provided by or on
behalf of any party hereto for use in the Joint
Proxy/Registration Statement shall be true and correct in all
material respects without omission of any material fact which is
required to make such information not false or misleading. No
representation, covenant or agreement is made by any party hereto
with respect to information supplied by any other party for
inclusion in the Joint Proxy/Registration Statement.
(b) Letter of Accountants for Iowa-Illinois. Iowa-Illinois
shall use best efforts to cause to be delivered to Resources a
letter of Deloitte & Touche, dated a date within two business
days before the date of the Joint Proxy/Registration Statement,
and addressed to Resources, in form and substance reasonably
satisfactory to Resources and customary in scope and substance
for "cold comfort" letters delivered by independent public
accountants in connection with registration statements on Form
S-4.
(c) Letter of Accountants for Resources. Resources shall
use best efforts to cause to be delivered to Iowa-Illinois a
letter of Arthur Andersen & Co., dated a date within two business
days before the date of the Joint Proxy/Registration Statement,
and addressed to Iowa-Illinois, in form and substance reasonably
satisfactory to Iowa-Illinois and customary in scope and
substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements on
Form S-4.
(d) Fairness Opinions. It shall be a condition to the
mailing of the Joint Proxy Statement to the shareholders of Iowa-
Illinois, Midwest Power and Resources that (i) Iowa-Illinois
shall have received an opinion from Dillon, Read & Co. Inc.,
dated the date of the Joint Proxy Statement, to the effect that,
as of the date thereof, the Iowa-Illinois Conversion Ratio and
the consideration to be received by the holders of Iowa-Illinois
Common Stock is fair from a financial point of view to the
holders of Iowa-Illinois Common Stock and (ii) Resources shall
have received an opinion from PaineWebber Incorporated, dated the
date of the Joint Proxy Statement, to the effect that, as of the
-48-
date thereof, the Resources Conversion Ratio and the
consideration to be received by the holders of Resources Common
Stock is fair from a financial point of view to the holders of
Resources Common Stock.
SECTION 7.3 Regulatory Approvals and Other Matters.
(a) HSR Filings. Each party hereto shall file or cause to
be filed with the Federal Trade Commission and the Department of
Justice any notifications required to be filed under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR Act"), and the rules and regulations promulgated thereunder
with respect to the transactions contemplated hereby. Such
parties will use all commercially reasonable efforts to make such
filings promptly and to respond promptly to any requests for
additional information made by either of such Governmental
Authorities.
(b) Other Approvals. Each party hereto shall cooperate and
use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to use all
commercially reasonable efforts to obtain all necessary Permits,
consents, approvals and authorizations of all Governmental
Authorities and all other persons necessary or advisable to
consummate the transactions contemplated by this Agreement,
including, without limitation, the Iowa-Illinois Required
Statutory Approvals, the Iowa-Illinois Required Consents, the
Resources Required Statutory Approvals and the Resources Required
Consents. Iowa-Illinois shall have the right to review and
approve in advance all characterizations of the information
relating to Iowa-Illinois, on the one hand, and Resources shall
have the right to review and approve in advance all
characterizations of the information relating to Resources and
Midwest Power, on the other hand, in either case, which appear in
any filing made in connection with the transactions contemplated
by this Agreement or the Merger. Iowa-Illinois, Midwest Power
and Resources agree that they will consult with each other with
respect to the obtaining of all such necessary or advisable
permits, consents, approvals and authorizations of Governmental
Authorities.
SECTION 7.4 Shareholder Approval.
(a) Approval of Resources Shareholders. Resources shall,
as soon as reasonably practicable after the date hereof, (i) take
all steps necessary duly to call, give notice of, convene and
hold a special meeting of its shareholders ("Resources Special
Meeting") for the purpose of securing the Resources Shareholders'
Approval, (ii) distribute to its shareholders the Joint Proxy
Statement in accordance with applicable federal and state law and
with its Articles of Incorporation and by-laws, (iii) subject to
the fiduciary duties of the Board of Directors of Resources,
recommend to its shareholders the approval of this Agreement, and
-49-
(iv) cooperate and consult with Iowa-Illinois with respect to
each of the foregoing matters.
(b) Approval of Iowa-Illinois Shareholders. Iowa-Illinois
shall, as soon as reasonably practicable after the date hereof,
(i) take all steps necessary to call, give notice of, convene and
hold a special meeting of its shareholders ("Iowa-Illinois
Special Meeting") for the purpose of securing the Iowa-Illinois
Shareholders' Approval, (ii) distribute to its shareholders the
Joint Proxy Statement in accordance with applicable federal and
state law and its Articles of Incorporation and by-laws, (iii)
subject to the fiduciary duties of the Board of Directors of
Iowa-Illinois, recommend to its shareholders the approval of this
Agreement and (iv) cooperate and consult with Resources with
respect to each of the foregoing matters.
(c) Approval of Midwest Power Shareholders. Midwest Power
shall, as soon as reasonably practicable after the date hereof,
(i) take all steps necessary to call, give notice of, convene and
hold a special meeting of its shareholders ("Midwest Power
Special Meeting") for the purpose of securing the Midwest Power
Shareholders' Approval, (ii) distribute to its shareholders the
Joint Proxy Statement in accordance with applicable federal and
state law and its Articles of Incorporation and by-laws, (iii)
subject to the fiduciary duties of the Board of Directors of
Midwest Power, recommend to its shareholders the approval of this
Agreement and (iv) cooperate and consult with Iowa-Illinois with
respect to each of the foregoing matters.
(d) Meeting Date. The Resources Special Meeting for the
purpose of securing the Resources Shareholders' approval, the
Iowa-Illinois Special Meeting for the purpose of securing the
Iowa-Illinois Shareholders' Approval, and the Midwest Power
Special Meeting for the purpose of securing the Midwest Power
Shareholders' Approval, shall be held on or before such date or
dates as Resources and Iowa-Illinois shall jointly determine.
SECTION 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. From and after the Effective Time,
the Company shall, to the fullest extent not prohibited by
applicable law, indemnify, defend and hold harmless the present
and former officers and directors of Iowa-Illinois, Resources and
Midwest Power (each an "Indemnified Party" and collectively, the
"Indemnified Parties") against all losses, expenses (including
reasonable attorney's fees), claims, damages or liabilities or,
subject to the proviso of the next succeeding sentence, amounts
paid in settlement arising out of actions or omissions occurring
at or prior to the Effective Time that are in whole or in part
based on, or arising out of the fact that such person is or was a
director or officer of Iowa-Illinois, Midwest Power or Resources
arising out of or pertaining to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim,
-50-
damage or liability (whether or not arising before the Effective
Time), (i) the Company shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to the Company (which consent
shall not be unreasonably withheld), promptly after statements
therefor are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited
by the Iowa Act or the Illinois Act, (ii) the Company will
cooperate in the defense of any such matter and (iii) any
determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth
under the Iowa Act or the Illinois Act and the Company's Articles
of Incorporation or by-Laws shall be made by independent counsel
mutually acceptable to the Company and the Indemnified Party;
provided, however, that the Company shall not be liable for any
settlement effected without its written consent (which consent
shall not be unreasonably withheld). The Indemnified Parties as
a group may retain only one law firm with respect to each related
matter except to the extent there is, in the sole opinion of
counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between
positions of any two or more Indemnified Parties.
(b) Insurance. For a period of six (6) years after the
Effective Time, the Company shall cause to be maintained in
effect the policies of directors' and officers' liability
insurance maintained by Iowa-Illinois, Resources and Midwest
Power; provided that the Company may substitute therefor policies
of at least the same coverage containing terms that are no less
advantageous with respect to matters occurring prior to the
Effective Time to the extent such liability insurance can be
maintained annually at a cost to the Company not greater than 150
percent of the respective current annual premiums for their
directors' and officers' liability insurance; provided, further,
that if such insurance cannot be so maintained or obtained at
such cost, the Company shall maintain or obtain as much of such
insurance for each of Iowa-Illinois, Resources and Midwest Power
as can be so maintained or obtained at a cost equal to 150
percent of the respective current annual premiums of each of
Iowa-Illinois, Midwest Power and Resources for their directors'
and officers' liability insurance.
(c) Successors. In the event that the Company or any of
its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision
shall be made so that the successors and assigns of the Company
shall assume the obligations set forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent not
prohibited by law, from and after the Effective Time, all rights
-51-
to indemnification as of the date hereof in favor of the
employees, agents, directors or officers of Iowa-Illinois and its
subsidiaries and Resources and its subsidiaries with respect to
their respective activities as such prior to the Effective Time,
as provided in their respective articles of incorporation or by-
laws, in effect on the date thereof or otherwise in effect on the
date hereof, shall survive the Merger and shall continue in full
force and effect for a period of not less than six (6) years from
the Effective Time.
SECTION 7.6 Disclosure Schedules.
(a) Within ten days following the date of execution of this
Agreement, (i) Resources shall deliver to Iowa-Illinois a
schedule ("Resources Disclosure Schedule"), which shall be
accompanied by a certificate signed by the chief financial
officer of Resources stating that the Resources Disclosure
Schedule is being delivered pursuant to this Section 7.6(a)(i)
and (ii) Iowa-Illinois shall deliver to Resources a schedule
("Iowa-Illinois Disclosure Schedule"), which shall be accompanied
by a certificate signed by the chief financial officer of
Iowa-Illinois stating that the Iowa-Illinois Disclosure Schedule
is being delivered pursuant to this Section 7.6(a)(ii). The
Resources Disclosure Schedule and the Iowa-Illinois Disclosure
Schedule are collectively referred to herein as the "Disclosure
Schedules." The Disclosure Schedules, when so delivered, shall
be deemed to constitute an integral part of this Agreement and to
modify the respective representations, warranties, covenants or
agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedules. Anything to the
contrary contained herein or in the Disclosure Schedules
notwithstanding, any and all statements, representations,
warranties or disclosures set forth in the Disclosure Schedules
shall be deemed to have been made on and as of the date hereof.
(b) For the period of 20 days (or, if extended pursuant to
the following sentence, 40 days) following the date of the execu-
tion of this Agreement (the "Due Diligence Period"), each of
Resources and Iowa-Illinois shall provide the other party and its
representatives access pursuant to Section 7.1 in order for the
other party to complete its due diligence investigation of the
party providing access pursuant to Section 7.1. Upon the
expiration of the Due Diligence Period, either Resources or Iowa-
Illinois may terminate this Agreement pursuant to and in
accordance with Section 9.1(i) (in the case of a termination by
Resources) or Section 9.1(j) (in the case of a termination by
Iowa-Illinois); provided, however, that it is expressly
understood and agreed that, if neither Resources nor
Iowa-Illinois terminates this Agreement pursuant to and in
accordance with Section 9.1(i) or 9.1(j), as the case may be,
-52-
then neither Resources nor Iowa-Illinois may thereafter assert a
failure of the condition set forth in Section 8.2(b) or in
Section 8.3(b), as the case may be, based on any information
provided to it during the Due Diligence Period. Either
Iowa-Illinois or Resources may extend the Due Diligence Period
until 40 days after the date of execution hereof by delivering
written notice to Resources or Iowa-Illinois, as the case may be,
before 5:00 p.m. Central Time on the 20th day following the date
of execution of this Agreement if it determines in good faith
that it will be unable to complete its due diligence
investigation of the other party and its subsidiaries by the
conclusion of such 20th day.
SECTION 7.7 Public Announcements. Subject to each
party's disclosure obligations imposed by law, Midwest Power,
Resources and Iowa-Illinois will cooperate with each other in the
development and distribution of all news releases and other
public information disclosures with respect to this Agreement or
any of the transactions contemplated hereby and shall not issue
any public announcement or statement prior to consultation with
the other party.
SECTION 7.8 Rule 145 Affiliates. Iowa-Illinois and
Resources shall each identify in a letter to the Company all
persons who are, at the Closing Date, "affiliates" of Iowa-
Illinois or of Resources, as the case may be, as such term is
used in Rule 145 under the Securities Act. Iowa-Illinois and
Resources shall each use their best efforts to cause their
respective affiliates to deliver to the Company on or prior to
the Closing Date a written certificate substantially in the form
described in Section 8.2(g) and Section 8.3(g).
SECTION 7.9 No Solicitations. No party hereto shall, and
each such party shall cause its subsidiaries not to, permit any
of its Representatives to, and shall use its best efforts to
cause such persons not to, directly or indirectly: initiate,
solicit or encourage, or take any action to facilitate the making
of any offer or proposal which constitutes or is reasonably
likely to lead to any Takeover Proposal (as defined below), or,
in the event of any unsolicited Takeover Proposal, engage in
negotiations or provide any confidential information or data to
any person relating to any Takeover Proposal. Each party hereto
shall notify the other party orally and in writing of any such
inquiries, offers or proposals (including, without limitation,
the terms and conditions of any such proposal and the identity of
the person making it), within 24 hours of the receipt thereof and
shall give the other party five days' advance notice of any
agreement to be entered into with or any information to be
supplied to any person making such inquiry, offer or proposal in
accordance with the last sentence of this Section 7.9. Each
party hereto shall immediately cease and cause to be terminated
all existing discussions and negotiations, if any, with any
parties conducted heretofore with respect to any Takeover
Proposal. As used in this Section 7.9, "Takeover Proposal" shall
mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Midwest
Power, Resources or Iowa-Illinois, or any proposal or offer to
-53-
acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of Midwest Power, Resources or
Iowa-Illinois, other than pursuant to the transactions
contemplated by this Agreement. Notwithstanding anything in this
Section 7.9 to the contrary, unless the Resources Shareholders'
Approval, the Midwest Power Shareholders' Approval and the
Iowa-Illinois Shareholders' Approval have all been obtained, any
party hereto may, to the extent required by the fiduciary duties
of the Board of Directors of such party under applicable law (as
determined in good faith by the Board of Directors of such party
based on the advice of outside counsel), participate in
discussions or negotiations with, furnish information to, and
afford access to the properties, books and records of such party
and its subsidiaries to any person in connection with a possible
Takeover Proposal with respect to such party by such person.
SECTION 7.10 Expenses. Subject to Section 9.3, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, except that those expenses incurred in
connection with printing the Joint Proxy/Registration Statement,
as well as the filing fee relating thereto, shall be paid 50% by
Resources and 50% by Iowa-Illinois.
SECTION 7.11 Board of Directors.
(a) Initial Composition. The initial number of directors
comprising the Board of Directors of the Company at the Effective
Time shall be nineteen (19) persons, eleven (11) of whom shall be
designated by Resources prior to the Effective Time and eight (8)
of whom shall be designated by Iowa-Illinois prior to the
Effective Time; provided, however, that if prior to the Effective
Time any of such designees shall decline or otherwise be unable
to serve, the party which designated such person shall be
entitled to designate a replacement.
(b) Initial Board Committees. The committees of the Board
of Directors of the Company at the Effective Time shall consist
of an equal number of Resources Designees and Iowa-Illinois
Designees. The initial Board committees and their respective
chair and vice-chair designations shall be as set forth on
Exhibit E.
(c) Composition After Transition. The parties recognize
the desirability of an objective of reducing the size of the
Board of Directors of the Company in an orderly manner, while
preserving the benefits associated with the familiarity of
management, policies, and operations derived from the ratio of
Iowa-Illinois Designees (as defined in Section 10.8) to Resources
Designees (as defined in Section 10.8) established in Section
7.11(a). Toward that objective, the Board of Directors, after
the Effective Time, shall implement a plan to reduce the number
-54-
of outside directors to no more than 14 by June 1, 1997. The
Nominating Committee of the Board shall be responsible for the
initial preparation of the plan. The plan, as implemented, shall
contain at least the following three features:
(i) until June 1, 1997 the mandatory retirement age
of seventy (70) for directors shall be waived to the
extent necessary to maintain the ratio of Iowa-Illinois
Designees to Resources Designees established in Section
7.11(a);
(ii) any nomination of persons for election to the
Board of Directors of the Company or designation of
persons for the filling of vacancies on the Board
(other than vacancies resulting from a reduction in the
size of the Board in accordance with this Section
7.11(c)) shall be effectuated by nominating or
selecting, as the case may be, Iowa-Illinois Designees
or Resources Designees so as to maintain the ratio of
Iowa-Illinois Designees to Resources Designees
established in Section 7.11(a); and
(iii) any reduction in the number of directors prior
to June 1, 1997 shall be accomplished so as to maintain
the ratio of Iowa-Illinois Designees to Resources
Designees established in Section 7.11(a) until June 1,
1997.
SECTION 7.12 Officers. On or prior to the Effective Time,
the Company shall enter into employment agreements ("Employment
Agreements") with Russell Christiansen and Stanley Bright,
respectively, substantially in the form of Exhibits F-1 and F-2,
attached hereto. From and after the Effective Time, pursuant to
the Employment Agreements and the terms hereof, Mr. Christiansen
and Mr. Bright shall hold the respective positions and perform
the duties set forth in Exhibit F-3. The terms and provisions of
the Employment Agreements, this Section 7.12 and Exhibit F-3
shall not be modified prior to December 31, 1999, unless and
until the terms of such modification are approved by (i) Mr.
Christiansen, in the case of a proposed modification to his
Employment Agreement, or Mr. Bright, in the case of a proposed
modification to his Employment Agreement, and (ii) a vote of
sixty-six and two-thirds percent (66-2/3%) of the members of the
Board of Directors of the Company.
SECTION 7.13 Employment Agreements and Workforce Matters.
Certain Employee Agreements. The Company shall after the
Effective Time honor, without modification, all contracts,
agreements, collective bargaining agreements and commitments of
the parties prior to the date hereof which apply to any current
or former employee or current or former director of any of the
parties hereto; provided, however, that this undertaking is not
intended to prevent the Company from enforcing such contracts,
agreements, collective bargaining agreements and commitments in
-55-
accordance with their terms, including, without limitation, any
reserved right to amend, modify, suspend, revoke or terminate any
such contract, agreement, collective bargaining agreement or
commitment.
SECTION 7.14 Severance Plan. At the Effective Time the
Severance Plan attached hereto as Exhibit G shall become
effective.
SECTION 7.15 Post-Merger Operations.
(a) Following the Effective Time, the Company shall
maintain (i) its corporate headquarters, the principal office of
the Chief Executive Officer and the corporate functions (without
limitation) of finance, treasury, secretary, shareholder
services, human resources and general counsel in Des Moines,
Iowa; (ii) the headquarters of the electric division and the
office of the most senior executive of such division in
Davenport, Iowa; and (iii) the headquarters of the gas division
and the office of the most senior executive of such division in
Sioux City, Iowa. This provision shall not be modified prior to
June 1, 1997, unless and until the terms of such modification are
approved by a vote of sixty-six an two-thirds percent (66-2/3%)
of the members of the Board of Directors of the Company.
(b) During the period from the Effective Time until June 1,
1997, the Company's name, as agreed upon by the Resources board
of directors and the Iowa-Illinois board of directors prior to
the Effective Time, shall not be modified unless and until the
terms of such modification are approved by a vote of sixty-six
and two-thirds percent (66-2/3%) of the members of the Board of
Directors of the Company and any required vote of the
shareholders of the Company under applicable law.
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction on or prior to
the Closing Date of the following conditions, except, to the
extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of
the parties hereto:
(a) Shareholder Approvals. The Resources Shareholders'
Approval, the Midwest Power Shareholders' Approval and the Iowa-
Illinois Shareholders' Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal
-56-
or state court preventing consummation of the Merger shall have
been issued and continuing in effect, and the Merger and the
other transactions contemplated hereby shall not have been
prohibited under any applicable federal or state law or
regulation.
(c) Registration Statement. The Registration Statement
shall have become effective in accordance with the provisions of
the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect.
(d) Listing of Shares. The shares of Company Common Stock
issuable in the Merger shall have been approved for listing on
the NYSE upon official notice of issuance.
(e) Statutory Approvals. The Iowa-Illinois Required
Statutory Approvals and the Resources Required Statutory
Approvals shall have been obtained at or prior to the Effective
Time, such approvals shall have become Final Orders (as
hereinafter defined) and such Final Orders shall not impose terms
or conditions which, in the aggregate, would have, or insofar as
reasonably can be foreseen, could have, a material adverse effect
on the business, operations, properties, assets, condition
(financial or other), prospects or the results of operations of
Iowa-Illinois as if it were organized as a separate division of
the Company or a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
prospects or the results of operations of Midwest Power as if it
were organized as a separate division of the Company, or which
would be inconsistent with the agreements of the parties
contained herein. A "Final Order" means action by the relevant
regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which
any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied.
(f) Pooling. Each of Iowa-Illinois and Resources shall
have received a letter of its independent public accountants,
dated the Closing Date, in form and substance reasonably
satisfactory to Iowa-Illinois and Resources, as the case may be,
stating that the Merger will qualify as a pooling of interests
transaction under GAAP and applicable SEC regulations.
(g) All applicable waiting periods under the HSR Act shall
have expired or been terminated.
SECTION 8.2 Conditions to Obligations of Resources and
Midwest Power to Effect the Merger. The obligations of Resources
and Midwest Power to effect the Merger shall be further subject
to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by Resources and
Midwest Power in writing pursuant to Section 9.5:
-57-
(a) Performance of Obligations of Iowa-Illinois. Iowa-
Illinois shall have performed in all material respects its
agreements and covenants contained in or contemplated by this
Agreement required to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations
and warranties of Iowa-Illinois set forth in this Agreement shall
be true and correct in all material respects (or where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be true and correct
in all respects) as of the date hereof (except to the extent such
representations and warranties speak as of an earlier or later
date) and as of the Closing Date as if made on and as of the
Closing Date, except as otherwise contemplated by this Agreement.
(c) Iowa-Illinois Material Adverse Effect. No
Iowa-Illinois Material Adverse Effect shall have occurred and
there shall exist no fact or circumstance which would, or insofar
as reasonably can be foreseen, could, have an Iowa-Illinois
Material Adverse Effect.
(d) Resources Required Consents. The material Resources
Required Consents shall have been obtained.
(e) Closing Certificate. Midwest Power and Resources shall
have received a certificate on behalf of Iowa-Illinois signed by
the chief executive officer and the chief financial officer of
Iowa-Illinois, dated the Closing Date, to the effect that, to the
best of each such officer's knowledge, the conditions set forth
in Sections 8.2(a), 8.2(b), 8.2(c) and 8.2(d) have been
satisfied.
(f) Tax Opinion. Resources shall have received an opinion
of its special tax counsel, Sidley & Austin, in form and
substance satisfactory to Resources, dated the Effective Time, or
a ruling from the IRS, in form and substance satisfactory to
Resources, to the effect that Resources and Midwest Power and
their respective shareholders (except to the extent any Resources
or Midwest Power shareholders receive cash in the Merger) will
recognize no gain or loss for federal income tax purposes as a
result of consummation of the Merger and in connection with the
delivery of its opinion pursuant to this Section 8.2(f), Sidley &
Austin may request certificates of officers of Resources and
Midwest Power.
(g) Affiliate Certificates. The Company shall have received
a certificate dated the Closing Date from each person who is an
affiliate of Iowa-Illinois to the effect that: (i) such person
has no present plan or intention to transfer, sell or otherwise
dispose of any Company Common Stock such person may receive as a
result of the Merger; (ii) until such time as financial results
covering at least thirty (30) days of post-closing combined
operations of Iowa-Illinois, Resources, Midwest Power and the
Company have been published, such person shall not sell such
Company Common Stock in any transaction, private or public, or in
-58-
any other way reduce such person's risk relative to any Company
Common Stock that such person receives as a result of the Merger;
(iii) any future disposition by such person of any Company Common
Stock such person receives as the result of the Merger will be
accomplished in accordance with Rule 145(d) under the Securities
Act; and (iv) such person agrees that the following legend be
placed upon the certificates evidencing ownership of the Company
Common Stock that such person receives as a result of the Merger:
THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER APPLICABLE TO AFFILIATES OF THE ISSUER AS SET FORTH IN
RULES 144 AND 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, HYPOTHECATED, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO THE PROCEDURES DESCRIBED THEREIN.
(h) Fairness Opinion. The fairness opinion letter from
PaineWebber Incorporated to Resources referred to in Section
7.2(d)(ii) shall not, in good faith, have been withdrawn by
PaineWebber Incorporated as of the date it issued such opinion
letter based upon its having obtained information material to its
opinions set forth in such letter, which information was in
existence but unavailable to it at the time it issued such
opinion letter and which, had such existing information been in
its possession at such time, would have caused it not to have
issued such opinion letter.
(i) The Company shall have duly executed and delivered to
Russell Christiansen an employment agreement substantially in the
form of Exhibit F-1 attached hereto, and such agreement shall be
in full force and effect.
SECTION 8.3 Conditions to Obligations of Iowa-Illinois to
Effect the Merger. The obligations of Iowa-Illinois to effect
the Merger shall be further subject to the satisfaction, prior to
the Closing Date, of the following conditions, except as may be
waived by Iowa-Illinois in writing pursuant to Section 9.5:
(a) Performance of Obligations of Resources and Midwest
Power. Each of Resources and Midwest Power shall have performed
in all material respects its agreements and covenants contained
in or contemplated by this Agreement required to be performed by
each of them at or prior to the Effective Time.
(b) Representations and Warranties. The representations
and warranties of each of Resources and Midwest Power set forth
in this Agreement shall be true and correct in all material
respects (or where any statement in a representation and warranty
expressly includes a standard of materiality, such statement
shall be true and correct in all respects) as of the date hereof
(except to the extent such representations and warranties speak
as of an earlier or later date) and as of the Closing Date as if
made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
-59-
(c) Resources Material Adverse Effect. No Resources
Material Adverse Effect shall have occurred and there shall exist
no fact or circumstance which would, or insofar as reasonably can
be foreseen, could, have a Resources Material Adverse Effect.
(d) Iowa-Illinois Required Consents. The material Iowa-
Illinois Required Consents shall have been obtained.
(e) Closing Certificate. Iowa-Illinois shall have received
a certificate on behalf of Midwest Power and Resources signed by
their respective chief executive officers and chief financial
officers, dated the Closing Date, to the effect that, to the best
of each such officer's knowledge, the conditions set forth in
Sections 8.3(a), 8.3(b), 8.3(c) and 8.3(d) have been satisfied.
(f) Tax Opinion. Iowa-Illinois shall have received an
opinion of its special tax counsel, LeBoeuf, Lamb, Greene &
MacRae, in form and substance satisfactory to Iowa-Illinois,
dated the Effective Time, or a ruling from the IRS, in form and
substance satisfactory to Iowa-Illinois, to the effect that Iowa-
Illinois and its shareholders (except to the extent any Iowa-
Illinois shareholders receive cash in the Merger) will recognize
no gain or loss for federal income tax purposes as a result of
consummation of the Merger and in connection with the delivery of
its opinion pursuant to this Section 8.3(f), LeBoeuf, Lamb,
Greene & MacRae may request certificates of officers of
Iowa-Illinois;
(g) Affiliate Certificates. The Company shall have
received a certificate dated the Closing Date from each person
who is an affiliate of Resources to the effect that: (i) such
person has no present plan or intention to transfer, sell or
otherwise dispose of any Company Common Stock such person may
receive as a result of the Merger; (ii) until such time as
financial results covering at least thirty (30) days of
post-closing combined operations of Iowa-Illinois, Resources,
Midwest Power and the Company have been published, such person
shall not sell such Company Common Stock in any transaction,
private or public, or in any other way reduce such person's risk
relative to any Company Common Stock that such person receives as
a result of the Merger; (iii) any future disposition by such
person of any Company Common Stock such person receives as the
result of the Merger will be accomplished in accordance with Rule
145(d) under the Securities Act; and (iv) such person agrees that
the following legend be placed upon the certificate evidencing
ownership of the Company Common Stock that such person receives
as a result of the Merger:
THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER APPLICABLE TO AFFILIATES OF THE ISSUER AS SET FORTH IN
RULES 144 AND 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, HYPOTHECATED, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO THE PROCEDURES DESCRIBED THEREIN.
-60-
(h) Fairness Opinion. The fairness opinion letter from
Dillon, Read & Co. Inc. to Iowa-Illinois referred to in Section
7.2(d)(i) shall not, in good faith, have been withdrawn by
Dillon, Read & Co. Inc. as of the date it issued such opinion
letter based upon its having obtained information material to its
opinion set forth in such letter, which information was in
existence but unavailable to it at the time it issued such
opinion letter and which, had such existing information been in
its possession at such time, would have caused it not to have
issued such opinion letter.
(i) The Company shall have duly executed and delivered to
Stanley Bright an employment agreement substantially in the form
of Exhibit F-2 attached hereto, and such agreement shall be in
full force and effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date, whether before or after
approval by the shareholders of the respective parties hereto
contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of
Midwest Power, Resources and Iowa-Illinois;
(b) by any party hereto, by written notice to the other, if
the Effective Time shall not have occurred on or before December
31, 1995; provided that such date shall automatically be changed
to June 30, 1996 if on December 31, 1995 the condition set forth
in Section 8.1(e) has not been satisfied or waived and the other
conditions to the consummation of the transactions contemplated
hereby are then capable of being satisfied, and the approvals
required by Section 8.1(e) which have not yet been obtained are
being pursued with diligence; and provided, further, that the
right to terminate this Agreement under this Section 9.1(b) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or
before such date;
(c) by any party hereto, by written notice to the other
party, if the Iowa-Illinois Shareholders' Approval shall not have
been obtained at a duly held Iowa-Illinois Special Meeting,
including any adjournments thereof; the Resources Shareholders'
Approval shall not have been obtained at a duly held Resources
Special Meeting, including any adjournments thereof; or the
Midwest Power Shareholders' Approval shall not have been obtained
at a duly held Midwest Power Special Meeting, including any
adjournments thereof;
-61-
(d) by any party hereto, if any state or federal law,
order, rule or regulation is adopted or issued, which has the
effect, as supported by the written opinion of outside counsel
for such party, of prohibiting the Merger, or by any party
hereto, if any court of competent jurisdiction in the United
States or any State shall have issued an order, judgment or
decree permanently restraining, enjoining or otherwise
prohibiting the Merger, and such order, judgement or decree shall
have become final and nonappealable;
(e) by Iowa-Illinois, upon two days' prior notice to
Resources, if, as a result of a tender offer by a party other
than Resources or any of its affiliates or any written offer or
proposal with respect to a merger, sale of a material portion of
its assets or other business combination (each, a "Business
Combination") by a party other than Resources or any of its
affiliates, the Board of Directors of Iowa-Illinois determines in
good faith that their fiduciary obligations under applicable law
require that such tender offer or other written offer or proposal
be accepted; provided, however, that (i) the Board of Directors
of Iowa-Illinois shall have been advised in writing by outside
counsel that notwithstanding a binding commitment to consummate
an agreement of the nature of this Agreement entered into in the
proper exercise of their applicable fiduciary duties, such
fiduciary duties would also require the directors to reconsider
such commitment as a result of such tender offer or other written
offer or proposal; and, (ii) prior to any such termination, Iowa-
Illinois shall, and shall cause its respective financial and
legal advisors to, negotiate with Resources to make such
adjustments in the terms and conditions of this Agreement as
would enable Iowa-Illinois to proceed with the transactions
contemplated herein; provided, further, that Iowa-Illinois and
Resources acknowledge and affirm that notwithstanding anything in
this Section 9.1(e) to the contrary, the parties hereto intend
this Agreement to be an exclusive agreement and, accordingly,
nothing in this Agreement is intended to constitute a
solicitation of an offer or proposal for a Business Combination,
it being acknowledged and agreed that any such offer or proposal
would interfere with the strategic advantages and benefits which
the parties expect to derive from the Merger.
(f) by Resources, upon two days' prior notice to Iowa-
Illinois if, as a result of a tender offer by a party other than
Iowa-Illinois or any of its affiliates or any written offer or
proposal with respect to a Business Combination by a party other
than Iowa-Illinois or any of its affiliates, the Board of
Directors of Resources determines in good faith that their
fiduciary obligations under applicable law require that such
tender offer or other written offer or proposal be accepted;
provided, however, that (i) the Board of Directors of Resources
shall have been advised in writing by outside counsel that
notwithstanding a binding commitment to consummate an agreement
of the nature of this Agreement entered into in the proper
-62-
exercise of their applicable fiduciary duties, such fiduciary
duties would also require the directors to reconsider such
commitment as a result of such tender offer or other written
offer or proposal; and (ii) prior to any such termination,
Resources shall, and shall cause its respective financial and
legal advisors to, negotiate with Iowa-Illinois to make such
adjustments in the terms and conditions of this Agreement as
would enable Resources to proceed with the transactions
contemplated herein; provided, further, that Iowa-Illinois and
Resources acknowledge and affirm that notwithstanding anything in
this Section 9.1(f) to the contrary, the parties hereto intend
this Agreement to be an exclusive agreement and, accordingly,
nothing in this Agreement is intended to constitute a
solicitation of an offer or proposal for a Business Combination,
it being acknowledged and agreed that any such offer or proposal
would interfere with the strategic advantages and benefits which
the parties expect to derive from the Merger.
(g) by Iowa-Illinois, by written notice to Resources, if
(i) there shall have been any material breach of any
representation or warranty, or any material breach of any
covenant or agreement of Resources or Midwest Power, hereunder,
and such breach shall not have been remedied within twenty days
after receipt by Resources of notice in writing from
Iowa-Illinois, specifying the nature of such breach and
requesting that it be remedied; or (ii) the Board of Directors of
Resources (A) shall withdraw or modify in any manner adverse to
Iowa-Illinois its approval of this Agreement and the transactions
contemplated hereby or its recommendation to its shareholders
regarding the approval of this Agreement, (B) shall fail to
reaffirm such approval or recommendation upon the request of
Iowa-Illinois, (C) shall approve or recommend any acquisition
by a third party of Resources or a material portion of its assets
or any tender offer for the Resources Common Stock, or (D) shall
resolve to take any of the actions specified in clause (A), (B)
or (C); provided, however, that Iowa-Illinois and Resources
acknowledge and affirm that notwithstanding anything in this
Section 9.1(g)(ii) to the contrary, the parties hereto intend
this Agreement to be an exclusive agreement and, accordingly,
nothing in this Agreement is intended to constitute a
solicitation of an offer or proposal for a Business Combination,
it being acknowledged and agreed that any such offer or proposal
would interfere with the strategic advantages and benefits which
the parties expect to derive from the Merger.
(h) by Resources, by written notice to Iowa-Illinois, if
(i) there shall have been any material breach of any
representation or warranty, or any material breach of any
covenant or agreement of Iowa-Illinois, hereunder, and such
breach shall not have been remedied within twenty days after
receipt by Iowa-Illinois of notice in writing from Resources,
specifying the nature of such breach and requesting that it be
remedied; or (ii) the Board of Directors of Iowa-Illinois (A)
shall withdraw or modify in any manner adverse to Resources its
-63-
approval of this Agreement and the transactions contemplated
hereby or its recommendation to its shareholders regarding the
approval of this Agreement, (B) shall fail to reaffirm such
approval or recommendation upon the request of Resources, (C)
shall approve or recommend any acquisition by a third party of
Iowa-Illinois or a material portion of its assets or any tender
offer for the Iowa-Illinois Common Stock, or (D) shall resolve to
take any of the actions specified in clause (A), (B) or (C);
provided, however, that Iowa-Illinois and Resources acknowledge
and affirm that notwithstanding anything in this Section
9.1(h)(ii) to the contrary, the parties hereto intend this
Agreement to be an exclusive agreement and, accordingly, nothing
in this Agreement is intended to constitute a solicitation of an
offer or proposal for a Business Combination, it being acknowl-
edged and agreed that any such offer or proposal would interfere
with the strategic advantages and benefits which the parties
expect to derive from the Merger.
(i) by Resources by written notice delivered to Iowa-
Illinois prior to 5:00 p.m. Central Time on September 4, 1994, if
Resources reasonably determines that its due diligence investi-
gation of Iowa-Illinois and its subsidiaries uncovered
information or matters which are (i) reasonably likely to have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), prospects or the results
of operations of Iowa-Illinois as if it were organized as a
separate division of the Company (an "Iowa-Illinois Divisional
Adverse Effect") or a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
prospects or the results of operations of Resources as if it were
organized as a separate division of the Company (a "Resources
Divisional Adverse Effect") or (ii) in the event the Merger is
consummated, reasonably likely to have a material adverse effect
on the holders of Resources Common Stock.
(j) by Iowa-Illinois by written notice delivered to
Resources prior to 5:00 p.m. Central Time on September 4, 1994,
if Iowa-Illinois reasonably determines that its due diligence
investigation of Resources and its subsidiaries uncovered infor-
mation or matters which are (i) reasonably likely to have a
Iowa-Illinois Divisional Adverse Effect or a Resources Divisional
Adverse Effect or (ii) in the event the Merger is consummated,
reasonably likely to have a material adverse effect on the
holders of Iowa-Illinois Common Stock.
SECTION 9.2 Effect of Termination. In the event of
termination of this Agreement by either Resources or
Iowa-Illinois pursuant to Section 9.1, there shall be no
liability on the part of either Iowa-Illinois, Resources or
Midwest Power or their respective officers or directors
hereunder, except Section 7.10 and 9.3 and the agreement
contained in Section 6.1(v) and in the last sentence of Section
7.1 shall survive the termination.
-64-
SECTION 9.3 Termination Fee; Expenses.
(a) Termination Fee. If this Agreement is terminated (i) at
such time that this Agreement is terminable pursuant to one of
Section 9.1(g)(i) or Section 9.1(h)(i) (other than solely
pursuant to a non-curable breach of a representation or warranty
unless such breach was willful) but not the other, or (ii) is
terminated pursuant to Section 9.1(e) or Section 9.1(f), then (A)
in the event of a termination pursuant to Section 9.1(f) or
Section 9.1(g)(i), Midwest Power shall pay to Iowa-Illinois, and
(B) in the event of a termination pursuant to Section 9.1(e) or
Section 9.1(h)(i), Iowa-Illinois shall pay to Midwest Power,
promptly (but not later than five business days after such notice
is received pursuant to Section 9.1(g)(i) or Section 9.1(h)(i) or
is given pursuant to Section 9.1(e) or Section 9.1(f)) an amount
equal to $15 million in cash if required to be paid by
Iowa-Illinois and $15 million in cash if required to be paid by
Midwest Power, plus in each case cash in an amount equal to all
documented out-of- pocket expenses and fees incurred by the other
party (including, without limitation, fees and expenses payable
to all legal, accounting, financial, public relations and other
professional advisors arising out of, in connection with or
related to the Merger or the transactions contemplated by this
Agreement) not in excess of $6 million.
(b) Additional Termination Fee and Subsequent Transaction
Fee. If (i) this Agreement (x) is terminated by any party
pursuant to Section 9.1(e) or Section 9.1(f), (y) is terminated
following a failure of the shareholders of Midwest Power or
Resources or Iowa-Illinois to grant the necessary approvals
described in Section 4.13 or Section 5.13 or (z) is terminated as
a result of such party's material breach of Section 7.4, and (ii)
at the time of such termination or prior to the meeting of such
party's shareholders there shall have been a third-party tender
offer for shares of, or a third-party offer or proposal with
respect to a Business Combination involving, such party or its
affiliates which at the time of such termination or of the
meeting of such party's shareholders shall not have been (x)
rejected by such party and its Board of Directors and (y)
withdrawn by the third-party and (iii) within 2 1/2 years of any
such termination described in clause (i) above, the party or its
affiliate which is the subject of the tender offer or offer or
proposal with respect to a Business Combination ("Target Party")
becomes a subsidiary of such offeror or a subsidiary of an
affiliate of such offeror, or merges with and into the offeror or
a subsidiary or affiliate of the offeror or enters into a
definitive agreement to consummate a Business Combination with
such offeror or affiliate thereof, then (A) in the event
Resources or one of its affiliates is the Target Party, Midwest
Power shall pay to Iowa-Illinois and (B) in the event
Iowa-Illinois or one of its affiliates is the Target Party,
Iowa-Illinois shall pay to Midwest Power, at the closing of the
transaction (and as a condition to the closing) in which such
Target Party becomes a subsidiary or such Business Combination
-65-
occurs ("Subsequent Transaction"), (1) a termination fee equal to
$30 million in cash if required to be paid by Iowa-Illinois and
$30 million in cash if required to be paid by Midwest Power plus
(2) a Subsequent Transaction fee payable in cash equal to 20% of
the difference between (I) $815,376,077 (if Resources or any of
its affiliates is the Target Party), or $637,751,871 (if Iowa-
Illinois or any of its affiliates is the Target Party) and (II)
the number of shares of Target Party common stock outstanding at
the time of the closing of the Subsequent Transaction multiplied
by the higher of (a) the average daily closing price of Target
Party common stock on the NYSE, or if such common stock is not
admitted to trading on the NYSE, on the market on which such
common stock is traded which has the highest volume of trades, on
the ten NYSE trading days immediately preceding the date of such
closing, or (b) the amount of cash plus the fair market value on
the day prior to such closing of any non-cash consideration to be
received for each share of Target Party common stock by the
holder thereof in the Subsequent Transaction (including in such
fair market value the fair market value of any Target Party
common stock retained by such holder as a result of the
Subsequent Transaction). The fair market value of any such
non-cash consideration shall be determined by a nationally
recognized accounting firm selected jointly by Resources and
Iowa-Illinois at least 60 days prior to the date of such closing.
The Target Party shall pay all of the fees and expenses of such
accounting firm for making such determination. The Target Party
shall agree to indemnify such accounting firm against any and all
liabilities, costs and expenses of whatever nature such
accounting firm may incur in connection with its determination of
such fair market value. The Target Party shall provide to such
accounting firm such security for the fee and expense payment and
indemnification obligations of the Target Party to such
accounting firm as it may request and the other party shall have
no liability for any of such fees and expenses nor shall it have
any obligation to indemnify such accounting firm for anything.
(c) Expenses. The parties agree that the agreements
contained in this Section 9.3 are an integral part of the trans-
actions contemplated by the Agreement and constitute liquidated
damages and not a penalty. If one party fails to pay promptly
to the other any expense and/or fee due hereunder, the defaulting
party shall pay the costs and expenses (including legal fees and
expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment,
together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Citibank, N.A. from the date
such fee was required to be paid.
(d) Limitation of Fees. Notwithstanding anything herein to
the contrary, the aggregate amount payable by Resources and its
affiliates pursuant to Section 9.3(a) and Section 9.3(b) shall
not exceed $51 million and the aggregate amount payable by Iowa-
-66-
Illinois and its affiliates pursuant to Section 9.3(a) and
Section 9.3(b) shall not exceed $51 million.
SECTION 9.4 Amendment. This Agreement may be amended by the
directors of the parties hereto, at any time before or after
approval hereof by the shareholders of Iowa-Illinois, Midwest
Power and Resources and prior to the Effective Time, but after
such approvals, no such amendment shall (i) alter or change the
amount or kind of shares, rights or any of the proceeds of the
conversion under Article II, or (ii) alter or change any of the
terms and conditions of this Agreement if any of the alterations
or changes, alone or in the aggregate, would materially adversely
affect the rights of holders of Iowa-Illinois Common Stock, Iowa-
Illinois Preferred Stock, Iowa-Illinois Preference Stock, Midwest
Power Preferred Stock or Resources Common Stock. This Agreement
may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 9.5 Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the perform-
ance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations, Warranties
and Agreements. No representations, warranties and agreements in
this Agreement shall survive the Merger, except as otherwise
provided in this Agreement and except for the agreements
contained in this Section 10.1 and in Article II, Section 6.1(v),
the last sentence of Section 7.1, Section 7.5, Section 7.10,
Section 7.11, Section 7.12, Section 7.13, Section 7.14, Section
7.15, Section 9.3 and Section 10.8.
SECTION 10.2 Brokers. Except as previously disclosed to
Iowa-Illinois, Resources and Midwest Power represent and warrant
that, except for PaineWebber Incorporated, their investment
banking firm, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Resources or Midwest Power. Except as previously disclosed to
Resources and Midwest Power, Iowa-Illinois represents and
warrants that, except for Dillon, Read & Co. Inc., its investment
banking firm, no broker, finder or investment banker is entitled
-67-
to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Iowa-Illinois.
SECTION 10.3 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if (i) delivered personally, or (ii) sent by reputable
overnight courier service, or (iii) telecopied (which is
confirmed), or (iv) five days after being mailed by registered or
certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Resources and/or Midwest Power, to:
Midwest Resources Inc.
Midwest Power Systems Inc.
666 Grand Avenue
P.O. Box 657
Des Moines, Iowa 50303
Attention: Chief Executive Officer
Telephone: 515-242-4300
Telecopy: 515-281-2981
with a concurrent copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: R. Todd Vieregg, P.C.
Telephone: 312-853-7470
Telecopy: 312-853-7036
(b) If to Iowa-Illinois, to:
Iowa-Illinois Gas and Electric Company
206 E. Second Street
Davenport, Iowa 52801
Attention: Chief Executive Officer
Telephone: 319-326-7243
Telecopy: 319-326-7670
with a concurrent copy to:
LeBoeuf, Lamb, Greene & MacRae
125 West 55th Street
New York, New York 10019
Attention: Douglas W. Hawes
Telephone: 212-424-8000
Telecopy: 212-424-8500
-68-
SECTION 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof other than the
Confidentiality Agreement; (ii) shall not be assigned by
operation of law or otherwise; and (iii) shall be governed by and
construed in accordance with the Illinois Act, the Iowa Act and
otherwise in accordance with the laws of the State of Iowa
applicable to contracts executed in and to be fully performed in
such State, without giving effect to its conflicts of law, rules
or principles. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect. The parties hereto agree
that they will negotiate in good faith to replace any provision
of this Agreement so held invalid or unenforceable, with a valid
provision that is as similar as possible in substance to the
invalid or unenforceable provision.
SECTION 10.5 Interpretation. When a reference is made in
this Agreement to Sections or Exhibits, such reference shall be
to a Section or Exhibit of this Agreement, respectively, unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
SECTION 10.6 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
SECTION 10.7 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties hereto will 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 in equity.
SECTION 10.8 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and, except for rights of Indemnified Parties as set
forth in Section 7.5, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this
Agreement.
-69-
Notwithstanding the foregoing and any other provision of this
Agreement, and in addition to any other required action of the
Board of Directors of the Company, (i) a majority of the Iowa-
Illinois Designees serving on the Board of Directors of the
Company shall be entitled during the five year period commencing
at the Effective Time (the "Five Year Period") to enforce the
provisions of Sections 7.11, 7.12 and 7.14 on behalf of the Iowa-
Illinois officers, directors and employees, as the case may be,
and (ii) a majority of the Resources Designees serving on the
Board of Directors of the Company shall be entitled during the
Five Year Period to enforce the provisions of Section 7.11, 7.12
and 7.14 on behalf of the Resources officers, directors and
employees, as the case may be. Such directors' rights and
remedies under the preceding sentence are cumulative and are in
addition to any other rights and remedies they may have at law or
in equity, but in no event shall this Section 10.8 be deemed to
impose any additional duties on any such directors. The Company
shall pay, at the time they are incurred, all costs, fees and
expenses of such directors incurred in connection with the
assertion of any rights on behalf of the persons set forth above
pursuant to this Section 10.8. For purposes of this Section 10.8
and Section 7.11, a "Iowa-Illinois Designee" or "Resources
Designee", as the case may be, shall at any time mean a person
who at such time is a member of the Board of Directors of the
Company who either (a) was designated a member of the Board of
Directors of the Company by Iowa-Illinois or by Resources, as the
case may be, pursuant to Section 7.11(a) or (b) was designated
(before his or her initial election as a member of the Board of
Directors of the Company as contemplated by Section 7.11(c)(ii))
as a "Iowa-Illinois Designee" or a "Resources Designee" by a
majority of the then Iowa-Illinois Designees or Resources
Designees, as the case may be.
SECTION 10.9 Further Assurances. Each party will execute
such further documents and instruments and take such further
actions as may reasonably be requested by any other party in
order to consummate the Merger in accordance with the terms
hereof. Iowa-Illinois, Resources and Midwest Power expressly
acknowledge that, although it is their current intention to
effect a business combination among themselves and the Company by
means of the Merger, it may be preferable for Iowa-Illinois,
Resources and Midwest Power to effectuate such a business
combination by means of an alternative structure in light of the
conditions set forth in Sections 8.2(d) and 8.3(d). Accordingly,
if the only conditions to the parties' obligations to consummate
the Merger which are not satisfied or waived are receipt of
Resources Required Consents, Resources Required Statutory
Approvals, Iowa-Illinois Required Consents and Iowa-Illinois
Required Statutory Approvals that, in the reasonable judgment of
Iowa-Illinois or Resources, would be rendered unnecessary by
adoption of an alternative structure that otherwise substantially
preserves for Iowa-Illinois, Resources and Midwest Power the
economic benefits of the Merger, Iowa-Illinois or Resources, as
-70-
the case may be, shall notify the other of such judgment no later
than 5:00 p.m. Central Time on December 31, 1995 and thereafter
the parties shall use their best efforts to effect a business
combination among themselves by means of a structure other than
the Merger that so preserves such benefits; provided that all
material third party and Governmental Authority declarations,
filings, registrations, notices, authorizations, consents or
approvals necessary for the effectuation of such alternative
business combination shall have been obtained and all other
conditions to the parties' obligations to consummate the Merger,
as applied to such alternative business combination, shall have
been satisfied or waived.
-71-
IN WITNESS WHEREOF, Midwest Resources Inc., Midwest Power
Systems Inc., Iowa-Illinois Gas and Electric Company, and
MidAmerican Energy Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized as
of the date first written above.
MIDWEST RESOURCES INC.
By: /s/ Russell E. Christiansen
Name: Russell E. Christiansen
Title: Chairman, President and
Chief Executive Officer
MIDWEST POWER SYSTEMS INC.
By: /s/ Russell E. Christiansen
Name: Russell E. Christiansen
Title: Chairman, President and
Chief Executive Officer
IOWA-ILLINOIS GAS AND ELECTRIC
COMPANY
By: /s/ Stanley J. Bright
Name: Stanley J. Bright
Title: Chairman and Chief
Executive Officer
MIDAMERICAN ENERGY COMPANY
By: /s/ Stanley J. Bright
Name: Stanley J. Bright
Title: President, Office of
the Chief Executive
Officer