-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Txd+Yw7rkoBpEoscRzMO/ccYic0sg27TB67id1LhG37PmWjTicnc3G8Bgpfecew2 WLO75q6i38uItg2EhPgXgw== 0000950123-97-006212.txt : 19970728 0000950123-97-006212.hdr.sgml : 19970728 ACCESSION NUMBER: 0000950123-97-006212 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 13 REFERENCES 429: 033-62259 REFERENCES 429: 333-29391 FILED AS OF DATE: 19970725 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IES UTILITIES INC CENTRAL INDEX KEY: 0000052485 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 420331370 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-32097 FILM NUMBER: 97645602 BUSINESS ADDRESS: STREET 1: 200 FIRST ST SE STREET 2: IES TOWER CITY: CEDAR RAPIDS STATE: IA ZIP: 52401 BUSINESS PHONE: 3193984411 FORMER COMPANY: FORMER CONFORMED NAME: IOWA ELECTRIC LIGHT & POWER CO DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IOWA RAILWAY & LIGHT CORP DATE OF NAME CHANGE: 19670629 S-3 1 FORM S-3 1 As filed with the Securities and Exchange Commission on July 25, 1997. Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- IES UTILITIES INC. (Exact Name of Registrant as Specified in Its Charter) IOWA 42-0331370 (State or Other Jurisdiction (I.R.S. Employer Identification Number) of Incorporation or Organization) IES TOWER 200 FIRST STREET S.E. CEDAR RAPIDS, IOWA 52401 (319) 398-4411 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) ----------------------- STEPHEN W. SOUTHWICK VICE PRESIDENT, GENERAL COUNSEL & SECRETARY IES UTILITIES INC. 200 FIRST STREET S.E. CEDAR RAPIDS, IOWA 52401 (319) 398-8147 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) It is respectfully requested that the Commission send copies of all notices, orders and communications to: RICHARD L. HARDEN WINTHROP, STIMSON, PUTNAM & ROBERTS ONE BATTERY PARK PLAZA NEW YORK, NY 10004-1490 (212) 858-1228 ----------------------- Approximate date of commencement of proposed sale of securities to the public: From time to time after this Registration Statement becomes effective. ----------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box./ / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box./x/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering./ / 2 If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering./ / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box./ / CALCULATION OF REGISTRATION FEE [CAPTION] ______________________________________________________________________________________________ ______________________________________________________________________________________________ Title of Securities Amount to Proposed Maximum Proposed Maximum Amount of to be Registered Be Registered Aggregate Price Aggregate Offering Registration Fee(1) Per Unit(1) Price(1) ______________________________________________________________________________________________ Debt Securities $50,000,000 100% $50,000,000 $ 0* ______________________________________________________________________________________________ ______________________________________________________________________________________________
(1) Estimated solely for the purpose of calculating the amount of the registration fee. * The filing fee of $15,152 has already been paid. Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus herein also relates to $50,000,000 principal amount of Debt Securities registered in Registration Statement No. 333-29391, for which a $15,152 filing fee was paid upon the filing of such Registration Statement, and $85,000,000 principal amount of Debt Securities registered in Registration Statement No. 33-62259, for which a $29,310 filing fee was paid upon filing of such Registration Statement. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 3 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. 4 PROSPECTUS Subject to Completion, Dated July 25, 1997 $135,000,000 IES UTILITIES INC. DEBT SECURITIES IES Utilities Inc. (the "Company") may from time to time issue up to $135,000,000 aggregate principal amount of its various debt securities, including Collateral Trust Bonds, Senior Debentures and Junior Subordinated Debentures (collectively referred to as "Securities"), in one or more series, at prices and on terms to be determined at the time of sale. The terms of the Securities in respect of which this Prospectus is being delivered, including, where applicable, the series designation, the principal amount of the series, the maturity, the rate and time of payment of interest, the initial public offering price, the provisions for redemption and other provisions, will be set forth in one or more Prospectus Supplements (each a "Prospectus Supplement"), together with the terms of offering of the Securities. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------- THE SECURITIES MAY BE SOLD BY THE COMPANY THROUGH UNDERWRITERS, DEALERS OR AGENTS, OR DIRECTLY TO ONE OR MORE PURCHASERS PURSUANT TO TERMS FIXED AT THE TIME OF SALE. THE PROSPECTUS SUPPLEMENT WILL SET FORTH THE NAMES OF THE UNDERWRITERS, DEALERS OR AGENTS, IF ANY, ANY APPLICABLE COMMISSIONS OR DISCOUNTS, AND THE NET PROCEEDS TO THE COMPANY FROM ANY SUCH SALE. SEE "PLAN OF DISTRIBUTION" FOR POSSIBLE INDEMNIFICATION ARRANGEMENTS FOR UNDERWRITERS, DEALERS OR AGENTS. THE DATE OF THIS PROSPECTUS IS ___________,1997. 5 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "SEC"). Such reports and other information can be inspected and copied at the public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the SEC's regional offices located at 1400 Citicorp Center, 500 West Madison Street, Chicago, Illinois 60601 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such materials can be obtained at prescribed rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. In addition, such reports and other information concerning the Company can be inspected at the principal office of the Company, 200 First Street S.E., Cedar Rapids, Iowa 52401. The Company has filed with the SEC a registration statement on Form S-3 (herein together with all amendments and exhibits referred to as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Securities offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information, reference is made to the Registration Statement and to the exhibits and schedules filed therewith, which may be inspected without charge at the office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such documents may also be obtained from the SEC at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the SEC pursuant to the Exchange Act are incorporated in this Prospectus by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1996; 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and 3. The Company's Current Report on Form 8-K dated April 28, 1997. All reports and other documents subsequently filed by the Company pursuant to Sections 13, 14 or 15(d) of the Exchange Act prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing such documents; provided, however, that documents filed by the Company pursuant to Sections 13, 14 or 15(d) of the Exchange Act prior to the end of the fiscal year covered by the most recent Annual Report on Form 10-K of the Company shall not be deemed to be incorporated herein by reference or to be a part hereof from and after the date of the filing of such Annual Reports on Form 10-K. The documents incorporated herein by reference are sometimes hereinafter called the "Incorporated Documents." Any statement contained herein or in an Incorporated Document shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in a Prospectus Supplement or in any subsequently filed Incorporated Document modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The information relating to the Company contained in this Prospectus summarizes, is based upon, or refers to, information and financial statements contained in one or more Incorporated Documents; accordingly, such information contained herein is qualified in its entirety by reference to Incorporated Documents and should be read in conjunction therewith. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the Incorporated Documents (not including exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to William Jurgensen, Director of 2 6 Shareholder Services, IES Industries Inc., 200 First Street S.E., Cedar Rapids, Iowa 52401, telephone (319) 398-7755. No person has been authorized to give any information or make any representation not contained in this Prospectus or, with respect to any Security, the Prospectus Supplement relating thereto, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or any underwriter. This Prospectus and any Prospectus Supplement do not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. Neither the delivery of this Prospectus and a Prospectus Supplement nor any sale made thereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of that Prospectus Supplement. TABLE OF CONTENTS AVAILABLE INFORMATION 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 2 THE COMPANY 3 THE MERGER 4 USE OF PROCEEDS 4 SELECTED CONSOLIDATED FINANCIAL INFORMATION 5 PLAN OF DISTRIBUTION 6 DESCRIPTION OF THE COLLATERAL TRUST BONDS 6 DESCRIPTION OF THE 1940 INDENTURE 17 DESCRIPTION OF THE ISU 1923 INDENTURE 22 DESCRIPTION OF THE SENIOR UNSECURED INDENTURE 27 DESCRIPTION OF THE SUBORDINATED INDENTURE 36 GLOBAL SECURITIES 45 EXPERTS 46 LEGAL MATTERS 46 THE COMPANY The Company was incorporated under the laws of the State of Iowa on May 25, 1925. The Company is a public utility operating company with all of its operations in the State of Iowa and is a wholly-owned subsidiary of IES Industries Inc. ("Industries"), a public utility holding company. The Company is the surviving corporation following the merger on December 31, 1993 of Iowa Southern Utilities Company ("Iowa Southern" or "ISU") with and into Iowa Electric Light and Power Company ("IE"). The surviving corporation was subsequently renamed IES Utilities Inc. The Company supplies electric energy and natural gas to a service area with an estimated population of approximately one million. For the twelve months ended March 31, 1997, the Company derived approximately 75% of its revenues from the sale of electric energy, approximately 22% from the sale of natural gas and approximately 3 7 3% from the sale of steam gas. At March 31, 1997, the Company provided service to approximately 336,000 electric, 176,000 natural gas and 226 steam retail customers as well as 30 resale customers in more than 550 Iowa communities. The Company's principal executive offices are located at 200 First Street S.E., Cedar Rapids, Iowa 52401, telephone (319) 398-4411. Additional information concerning the Company and its operations is contained in the Incorporated Documents, to which reference is hereby made. THE MERGER On November 10, 1995, Industries, WPL Holdings, Inc. ("WPLH") and Interstate Power Company ("IPC") entered into an Agreement and Plan of Merger, as amended ("Merger Agreement"), providing for: (a) IPC becoming a wholly-owned subsidiary of WPLH, and (b) the merger of Industries with and into WPLH, which merger will result in the combination of Industries and WPLH as a single holding company (collectively, the "Proposed Merger"). The new holding company will be named Interstate Energy Corporation ("Interstate Energy") and Industries will cease to exist. The Proposed Merger, which will be accounted for as a pooling of interests and is intended to be tax-free for federal income tax purposes, has been approved by the respective Boards of Directors and shareholders. It is still subject to approval by several federal and state regulatory agencies. The companies expect to receive such regulatory approvals by the third or fourth quarter of 1997. WPLH is a holding company headquartered in Madison, Wisconsin, and is the parent company of Wisconsin Power and Light Company ("WP&L") and Heartland Development Corporation ("HDC"). WP&L supplies electric and gas service to approximately 385,000 and 150,000 customers, respectively, in south and central Wisconsin. HDC and its principal subsidiaries are engaged in businesses in three major areas: environmental engineering and consulting, affordable housing and energy services. IPC, an operating public utility headquartered in Dubuque, Iowa, supplies electric and gas service to approximately 165,000 and 49,000 customers, respectively, in northeast Iowa, northwest Illinois and southern Minnesota. Interstate Energy will be the parent company of Utilities, WP&L and IPC and will be registered under the Public Utility Holding Company Act of 1935, as amended. The Merger Agreement provides that these operating utility companies will continue to operate as separate entities for a minimum of three years beyond the effective date of the merger. In addition, the non-utility operations of the Company and WPLH will be combined shortly after the effective date of the merger under one entity to manage the diversified operations of Interstate Energy. The corporate headquarters of Interstate Energy will be in Madison, Wisconsin. The Securities and Exchange Commission historically has interpreted the 1935 Act to preclude registered holding companies, with limited exceptions, from owning both electric and gas utility systems. Although the Securities and Exchange Commission has recommended that registered holding companies be allowed to hold both gas and electric utility operations if the affected states agree, it remains possible that the Securities and Exchange Commission may require as a condition to its approval of the Proposed Merger that the Company, WPLH and IPC divest their gas utility properties, and possibly certain non-utility ventures of the Company and WPLH, within a reasonable time after the effective date of the Proposed Merger. Additional information concerning the Proposed Merger is contained in the Incorporated Documents, to which reference is hereby made. USE OF PROCEEDS Except as otherwise provided in the applicable Prospectus Supplement or a supplement thereto, the Company intends to use the net proceeds to be received from the issuance and sale of the Securities offered hereby (i) to reduce short-term debt and (ii) for general corporate purposes. 4 8 SELECTED CONSOLIDATED FINANCIAL INFORMATION (In thousands, except percentages and ratios) The financial data presented below should be read in conjunction with the Company's consolidated financial statements and notes thereto which are incorporated by reference in this Prospectus.
TWELVE YEAR ENDED DECEMBER 31, MONTHS ENDED ------------------------------------------------------------ MARCH 31, 1997 (UNAUDITED) 1996 1995 1994 1993 1992 --------- ---- ---- ---- ---- ---- Income Summary: Operating revenues ....... $782,609 $754,979 $709,826 $685,366 $713,750 $610,262 Operating income ......... 152,110 153,725 142,265 135,591 143,329 100,361 Net income ............... 61,452 63,729 59,278 61,210 67,970 45,291 Dividend requirements on preferred stock ........ 914 914 914 914 914 1,729 Net income available for common stock(1) ........ 60,538 62,815 58,364 60,296 67,056 43,562 Cash dividends declared on common stock ..... 48,000 44,000 43,000 52,000 31,300 24,721 Ratio of earnings to fixed charges(2) ............... 3.09 3.23 3.04 3.18 3.41 2.49
MARCH 31, 1997 (UNAUDITED) (3) ----------------------------------- PERCENT OF ACTUAL CAPITALIZATION ------ -------------- Capitalization Summary: Long-term debt(4)........ $525,529 48.4% Preferred stock.......... 18,320 1.7% Common equity............ 541,428 49.9% ---------- ------ Total................. $1,085,277 100.0% ========== ======
- ------------------------------------------ (1) All of the Company's common stock is owned by IES Industries Inc. (2) For purposes of computation of these ratios, (a) earnings have been calculated by adding fixed charges and federal and state income taxes to net income; (b) fixed charges consist of interest (including amortization of debt expense, premium and discount) on long-term and other debt, and the estimated interest component of rents. (3) Does not reflect the issuance of the Securities or the use of the proceeds thereof. (4) Includes $63,140,000 of current maturities. 5 9 PLAN OF DISTRIBUTION The Company may sell the Securities in any of three ways: (i) through underwriters or dealers, (ii) directly to one or more purchasers, or (iii) through agents. The applicable Prospectus Supplement will set forth the terms of any offering of the Securities, including the names of any underwriters or agents, the purchase price of such Securities, the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, the initial public offering price, and any discounts or concessions allowed or reallowed or paid to dealers. If underwriters are used in the sale, the Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Such Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase such Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of such Securities if any of such Securities are purchased. The initial public offering prices and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Securities may also be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of the Securities will be named, and any commissions payable by the Company to such agent will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus Supplement, any such agent will act on a reasonable efforts basis for the period of its appointment. If so indicated in the applicable Prospectus Supplement, the Company will authorize agents, underwriters, or dealers to solicit offers by certain specified institutions to purchase the Securities at the public offering price set forth in such Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a future date specified in such Prospectus Supplement or a supplement thereto. Such contracts will be subject only to those conditions set forth in the applicable Prospectus Supplement, and such Prospectus Supplement will set forth the commissions payable for solicitation of such contracts. Any underwriters, dealers, or agents participating in the distribution of the Securities may be deemed to be underwriters, and any discounts or commissions received by them on the sale or resale of the Securities may be deemed to be underwriting discounts and commissions, under the Securities Act. Agents and underwriters may be entitled under agreements entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under the Securities Act. Agents and underwriters may be customers of, engage in transactions with, or perform services for the Company or its affiliates in the ordinary course of business. DESCRIPTION OF THE COLLATERAL TRUST BONDS GENERAL If the Securities are issued as Collateral Trust Bonds, those Collateral Trust Bonds will be issued in one or more series as fully registered bonds, without coupons, under an Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993 (the "Original Mortgage"), between the Company and The First National Bank of Chicago, as Trustee (the "Trustee"), as amended and supplemented. As used herein, the term "Bonds" refers to any series of Collateral Trust Bonds in respect of which this Prospectus is being delivered. The Original Mortgage as amended and supplemented by various supplemental indentures including one or more supplemental indentures relating to any issuance of Collateral Trust Bonds, is hereinafter referred to as the "Mortgage." The summaries herein concerning the Collateral Trust Bonds do not purport to be complete and are subject to the detailed provisions of the Mortgage, a copy of which was previously filed with the Commission, is listed as an exhibit to the Registration Statement of which this Prospectus is a part, and is incorporated herein by reference. Capitalized terms used herein which are not otherwise defined in this Prospectus have the meanings ascribed thereto in the Mortgage. Wherever particular provisions of the Mortgage or terms defined therein are referred to, such provisions or definitions are incorporated 6 10 by reference as a part of the statements made herein and such statements are qualified in their entirety by such reference. References to article and section numbers herein, unless otherwise indicated, are references to article and section numbers of the Mortgage. The Mortgage provides that, in addition to Collateral Trust Bonds, additional debt securities may be issued thereunder, without limitation as to the aggregate principal amount. (See "Issuance of Additional Securities" below.) The Bonds will be secured equally and ratably with all other securities issued under the Mortgage. TERMS OF SPECIFIC SERIES OF THE BONDS Reference is made to the applicable Prospectus Supplement, or a supplement thereto, for a description of the following terms of the Bonds: (i) the title of such Bonds; (ii) the limit, if any, upon the aggregate principal amount of such Bonds; (iii) the date or dates on which the principal of such Bonds is payable; (iv) the rate or rates at which such Bonds will bear interest, if any; the date or dates from which such interest will accrue; the dates on which such interest will be payable ("Interest Payment Dates"); and the regular record dates for the interest payable on such Interest Payment Dates; (v) the option, if any, of the Company to redeem such Bonds and the periods within which or the dates on which, the prices at which and the terms and conditions upon which, such Bonds may be redeemed, in whole or in part, upon the exercise of such option; (vi) the obligation, if any, of the Company to redeem or purchase Bonds pursuant to any sinking fund or analogous provisions or at the option of the Holder (as hereinafter defined) and the periods within which or the dates on which, the prices at which and the terms and conditions upon which, such Bonds will be redeemed, in whole or in part, pursuant to such obligation; (vii) the denominations in which such Bonds will be issuable; (viii) whether such Bonds are to be issued in whole or in part in the form of one or more global Bonds and, if so, the identity of the depositary for such global Bonds; and (ix) any other terms of such Bonds not inconsistent with the provisions of the Mortgage. PAYMENT OF BONDS; TRANSFERS; EXCHANGES Except as may be provided in the applicable Prospectus Supplement, or a supplement thereto, interest, if any, on each Bond payable on each Interest Payment Date will be paid to the person in whose name such Bond is registered (the registered holder of any Bond being hereinafter called a "Holder") as of the close of business on the regular record date relating to such Interest Payment Date; provided, however, that interest payable at maturity (whether at stated maturity, upon redemption or acceleration of maturity or otherwise, hereinafter "Maturity") will be paid to the person to whom principal is paid. However, if there has been a default in the payment of interest on any Bond, such defaulted interest may be payable to the Holder of such Bond as of the close of business on a date selected by the Trustee which is not more than 15 days and not less than 10 days prior to the date proposed by the Company for payment of such defaulted interest or in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Bond may be listed, if the Trustee deems such manner of payment practicable. (Section 307) Principal of and premium, if any, and interest on the Bonds at Maturity will be payable upon presentation of the Bonds at the office of the Trustee in Chicago, Illinois or, at the option of the Holder, at the principal corporate trust office of The First National Bank of Chicago in New York, New York. The transfer of Bonds may be registered, and the Bonds may be exchanged for other Bonds of the same series and tranche, of authorized denominations of like tenor and aggregate principal amount, at the office of The First National Bank of Chicago in New York, New York as Bond Registrar for the Bonds. The Company will not be required to issue, and no Bond Registrar will be required to register the transfer of or to exchange (a) Collateral Trust Bonds of any series (including the Bonds offered hereby) during a period of 15 days prior to giving any notice of redemption thereof or (b) any Bond selected for redemption in whole or in part, except the unredeemed portion of any Bond being redeemed in part. (Section 305) The Company may change the place for payment or registration of transfer or exchange of the Bonds, may appoint one or more additional Paying Agents or Bond Registrars (including, without limitation, the Company) and may remove any Paying Agent or Bond Registrar, all at its discretion. The applicable Prospectus Supplement or a supplement thereto, will identify any such changes prior to the date of such Prospectus Supplement or supplement thereto. (Section 602) 7 11 REDEMPTION Any terms for the optional or mandatory redemption of the Bonds will be set forth in a Prospectus Supplement or a supplement thereto. Except as will otherwise be provided with respect to Bonds redeemable at the option of the Holder, redeemable Bonds will be redeemed only upon notice by mail not less than 30 nor more than 60 days prior to the date fixed for redemption and, if less than all the Bonds of a series, or any tranche thereof, are to be redeemed, the particular Bonds to be redeemed will be selected by such method as will be provided for any particular series, or in the absence of any such provision, by such method as the Bond Registrar deems fair and appropriate. (Sections 503 and 504) Any notice of redemption of Bonds, at the option of the Company, may state that such redemption will be conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Bonds and that if such money has not been so received, such notice will be of no force and effect and the Company will not be required to redeem such Bonds. (Section 504) NO MAINTENANCE, REPLACEMENT OR SINKING FUNDS While the Mortgage contains provisions for the maintenance of the Mortgage Property (Section 601), it does not contain any provisions for any maintenance, replacement, sinking or analogous fund and, except as may be provided in the applicable Prospectus Supplement, or a supplement thereto, there will be no provisions for any such funds for the Bonds. SECURITY GENERAL. Except as discussed below, securities (including the Bonds) now or hereafter issued under the Mortgage will be secured primarily by: (a) first mortgage bonds issued under the Company's Indenture of Mortgage and Deed of Trust, dated as of August 1, 1940 (as amended and supplemented, the "1940 Indenture"), to The First National Bank of Chicago, as trustee (the "1940 Indenture Trustee"), and delivered to the Trustee under the Mortgage. As discussed under "DESCRIPTION OF THE 1940 INDENTURE - Security," the 1940 Indenture constitutes, subject to certain exceptions, a first mortgage lien on substantially all of the properties of the Company except properties of Iowa Southern at the time of the IE-ISU merger; (b) first mortgage bonds issued under Iowa Southern's Indenture or Deed of Trust, dated as of February 1, 1923 (as amended and supplemented, the "ISU 1923 Indenture"), with The Northern Trust Company (The First National Bank of Chicago, successor) (the "ISU Corporate Trustee") and Harold H. Rockwell (Richard D. Manella, successor) as trustees (the "ISU Indenture Trustees"), and delivered to the Trustee under the Mortgage; as discussed under "DESCRIPTION OF THE ISU 1923 INDENTURE Security," the ISU 1923 Indenture constitutes, subject to certain exceptions, a first mortgage lien on substantially all of the properties owned by Iowa Southern at the time of the IE-ISU merger (which are now, subsequent to such merger, properties of the Company); and (c) the Lien of the Mortgage on the Company's properties used in the generation, purchase, transmission, distribution or sale of electric energy by the Company, or in the manufacture of manufactured gas, or in the purchase, transportation, distribution or sale of manufactured gas or natural gas, or in the generation, manufacture, distribution or sale of steam and hot water, which Lien is junior to the liens of the 1940 Indenture and the ISU 1923 Indenture. (Granting Clause First) As discussed below under "Class "A" Bonds," following a merger or consolidation of another corporation into the Company, or the transfer by another corporation of property to the Company, the Company could issue and deliver to the Trustee bonds issued under an existing mortgage on the properties of such other corporation in lieu of or in addition to bonds issued under the 1940 Indenture or the ISU 1923 Indenture. In such event, the securities 8 12 (including the Bonds) issued under the Mortgage would be secured, additionally, by such bonds and by the Lien of the Mortgage on the properties of such other corporation, which would be junior to the liens of the existing mortgage of such corporation, the 1940 Indenture and the ISU 1923 Indenture. The 1940 Indenture and the ISU 1923 Indenture and all such other mortgages are hereinafter, collectively, called the "Class "A" Mortgages," and all bonds outstanding under the Class "A" Mortgages are hereinafter collectively called the "Class "A" Bonds." If and when no Class "A" Mortgages are in effect, the Mortgage will constitute a first mortgage lien on all property of the Company subject thereto. (Sections 101 and 706) CLASS "A" BONDS. Any Class "A" Bonds issued after the date of the Mortgage (other than in substitution or exchange for previously outstanding Class "A" Bonds) will be issued and delivered to, and registered in the name of, the Trustee or its nominee and will be owned and held by the Trustee, subject to the provisions of the Mortgage, for the benefit of the Holders of all securities issued under the Mortgage and Outstanding from time to time. Class "A" Bonds issued as the basis of authentication and delivery of securities under the Mortgage (a) will mature on the same dates, and in the same principal amounts, as such securities and (b) will contain, in addition to any mandatory redemption provisions applicable to all Class "A" Bonds Outstanding under the related Class "A" Mortgage, mandatory redemption provisions correlative to provisions for mandatory redemption, or for redemption at the option of the Holder, of such securities. Class "A" Bonds issued as the basis for authentication and delivery of a series or tranche of securities under the Mortgage (x) may, but need not, bear interest, any such interest to be payable at the same times as interest on the securities of such series or tranche and (y) may, but need not, contain provisions for the redemption thereof at the option of the Company, any such redemption to be made at a redemption price or prices not less than the principal amount of such Class "A" Bonds. (Sections 402 and 701) Any payment by the Company of principal of or premium or interest on the Class "A" Bonds held by the Trustee will be applied by the Trustee to the payment of any principal, premium or interest, as the case may be, in respect of any Mortgage securities which is then due and, to the extent of such application, the obligation of the Company under the Mortgage to make such payment in respect of such securities will be deemed satisfied and discharged. If, at the time of any such payment of principal of Class "A" Bonds, such payment shall exceed the amount of principal then due in respect of the securities, the excess of such payment will be deemed to constitute Funded Cash and will be held by the Trustee as part of the Mortgaged Property, to be withdrawn, used or applied as provided in the Mortgage. If, at the time of any such payment of premium or interest on Class "A" Bonds held by the Trustee, such payment shall exceed the amount of premium or interest then due in respect of such securities, the excess of such payments will be remitted to the Company at its request. Any payment by the Company of principal of or premium or interest on any Mortgage securities authenticated and delivered on the basis of the deposit with the Trustee of Class "A" Bonds (other than by application of the proceeds of a payment in respect of such Class "A" Bonds) will, to the extent thereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal, premium or interest, as the case may be, in respect of such Class "A" Bonds which is then due. (Section 702; see "Withdrawal of Cash" below.) The Trustee may not sell, assign or otherwise transfer any Class "A" Bonds held by the Trustee except to a successor trustee under the Mortgage. (Section 704) At the time any Mortgage securities of any series or tranche which have been authenticated and delivered upon the basis of Class "A" Bonds cease to be Outstanding (other than a result of the application of the proceeds of the payment or redemption of such Class "A" Bonds), the Trustee shall surrender to, or upon the order of, the Company an equal principal amount of such Class "A" Bonds having the same Stated Maturity and mandatory redemption provisions as such securities. (Section 703) At the date of this Prospectus, the only Class "A" Mortgages are the 1940 Indenture and the ISU 1923 Indenture and the only Class "A" Bonds issuable are first mortgage bonds issuable thereunder. The Mortgage provides that in the event of the merger or consolidation of another company with or into the Company, an existing mortgage constituting a lien on properties of such other company prior to the Lien of the Mortgage may be designated by the Company as an additional Class "A" Mortgage. Any bonds thereafter issued under such additional mortgage would be Class "A" Bonds and (other than in substitution or exchange for previously Outstanding Class "A" Bonds) could be issued only to provide the basis for the authentication and delivery of securities under the Mortgage. (Section 706) When no bonds are Outstanding under a Class "A" Mortgage except for Class "A" Bonds held by the Trustee, then, at the request of the Company and subject to satisfaction of certain conditions, the Trustee will surrender such Class "A" Bonds for cancellation and the related Class "A" Mortgage will be satisfied and 9 13 discharged; whereupon, the lien of such Class "A" Mortgage on the property owned by the Company will cease to exist and the Lien of the Mortgage will become a first mortgage lien on such property, subject to Permitted Liens. (Section 707) So long as any securities are Outstanding under the Mortgage, the Company will not (a) issue any additional Class "A" Bonds except (i) to replace any mutilated, destroyed, lost or stolen securities of the same series or to effect exchanges and transfers of such securities or (ii) to the Trustee as the basis for the authentication and delivery of securities or (b) subject to the lien of any Class "A" Mortgage any property which is excepted and excluded from, or not included in or subject to, the lien of such Class "A" Mortgage. (Section 610) First mortgage bonds may be issued under the 1940 Indenture on the basis of property additions, retirements of bonds previously issued under the 1940 Indenture and cash deposited with the 1940 Indenture Trustee. (See "DESCRIPTION OF THE 1940 INDENTURE - Issuance of Additional Bonds.") First mortgage bonds may be issued under the ISU 1923 Indenture on the basis of property additions, retirements of bonds previously issued under the ISU 1923 Indenture and cash deposited with the ISU Corporate Trustee. (See "DESCRIPTION OF THE ISU 1923 INDENTURE - Issuance of Additional Bonds.") LIEN OF THE MORTGAGE. At the date of this Prospectus, substantially all of the Company's property subject to the Lien of the Mortgage is also subject to the prior lien of the 1940 Indenture or the ISU 1923 Indenture. Any Bonds offered hereby will have the benefit of the first mortgage lien of the 1940 Indenture and the ISU 1923 Indenture on such property, and the benefit of the prior lien of any additional Class "A" Mortgage on any property subject thereto, to the extent of the aggregate principal amount of Class "A" Bonds issued under the respective Class "A" Mortgage and held by the Trustee. The Lien of the Mortgage is subject to Permitted Liens which include tax liens and other governmental charges which are not delinquent or which can thereafter be paid without penalty or which are being contested, construction and materialmen's liens, certain judgment liens, easements, reservations and rights of others (including governmental entities) in, and defects of title in, certain property of the Company, certain leasehold interests, liens on the Company's pollution control and sewage and solid waste disposal facilities which were previously financed with industrial development revenue bonds and certain other liens and encumbrances. (Granting Clauses and Section 101) There are excepted from the Lien of the Mortgage, among other things, cash and securities not paid, deposited or held under the Mortgage; contracts, leases and other agreements of all kinds, contract rights, bills, notes and other instruments, accounts receivable, claims, judgments, certain intellectual property rights and other general intangibles; automobiles, aircraft and vessels; all goods, wares, merchandise, equipment, spare parts, tools, materials, supplies and fuel held for sale or lease in the ordinary course of business or for use or consumption in, or in the operation of, any properties of or for the benefit of the Company; nuclear fuel; computers, machinery and equipment used exclusively for corporate administrative or clerical purposes; all gas, oil, minerals and timber, and rights thereto; electric energy, gas, steam, water and other products generated, produced or purchased; property installed on the premises of customers of the Company and designed to aid in conservation or efficient use of energy; leasehold interests and leasehold improvements of the Company; and all property which is located outside of the State of Iowa and is neither specifically described in the Granting Clauses of the Mortgage nor specifically subjected or required to be subjected to the Lien of the Mortgage by any provision thereof. (Granting Clauses) Without the consent of the Holders, the Company and the Trustee may enter into supplemental indentures to subject to the Lien of the Mortgage additional property (including property which would otherwise be excepted from such Lien). (Section 1401) Such property, so long as the same would otherwise constitute Property Additions, would thereupon constitute Property Additions and be available as a basis for the issuance of securities under the Mortgage. (See "Issuance of Additional Securities" below.) Property Additions generally include any unit or element of property which is owned by the Company and is subject to the Lien of the Mortgage except (i) any property, the cost of acquisition or construction of which is property chargeable to an operating expense account of the Company and (ii) goodwill, going concern value rights and intangible property, unless the cost thereof is included in the cost of such unit or element of property and no separate consideration was paid or apportioned therefor, in which case Property Additions may include such goodwill, going concern rights and intangible property. (Section 103) 10 14 The Mortgage contains provisions subjecting after-acquired property (other than Excepted Property) to the Lien thereof. These provisions are limited in the case of consolidation or merger or sale of substantially all of the Company's assets. In the event of consolidation or merger or the transfer of all of the Mortgaged Property as or substantially as an entirety, the Mortgage will not be required to be a lien upon any of the properties then owned or thereafter acquired by the successor corporation except properties acquired from the Company in or as a result of such transaction and properties which are an integral part of, or essential to the use or operation of, any Mortgaged Property, and renewals, replacements and substitutions of or for any part thereof. (Article Thirteen; see "Consolidation, Merger, Conveyance, Transfer or Lease" below.) In addition, after-acquired property may be subject to vendors' liens, purchase money mortgages and other liens thereon at the time of acquisition thereof, including the lien of any Class "A" Mortgage. The Mortgage provides that the Trustee will have a lien, prior to the lien on behalf of the holders of securities issued under the Mortgage, upon Mortgaged Property, for the payment of its reasonable compensation and expenses and for indemnity against certain liabilities. (Section 1107) ISSUANCE OF ADDITIONAL SECURITIES The maximum principal amount of securities which may be issued under the Mortgage is unlimited. (Section 301) Under the Mortgage, securities of any series may be issued from time to time on the basis of, and in an aggregate principal amount not exceeding: (1) the aggregate principal amount of Class "A" Bonds issued and delivered to the Trustee for such purpose; (2) 75% of the Cost or fair value (whichever is less) of Property Additions (as described below) which do not constitute Funded Property (generally, Funded Property includes Property Additions which have been made, or deemed to have been made, the basis of the authentication and delivery of securities, the release of Mortgaged Property from the Lien of the Mortgage or cash withdrawals, or which have been substituted for retired property), after certain deductions and additions, primarily including adjustments to offset property retirements; (3) the aggregate principal amount of Retired Securities (which consist of securities no longer outstanding under the Mortgage which have not been used for certain other purposes under the Mortgage and which are not to be paid, redeemed, purchased or otherwise retired by the application thereto of Funded Cash) or Retired Prior Lien Bonds; and (4) the amount of cash deposited with the Trustee. (Article Four) THE COMPANY IS NOT REQUIRED TO SATISFY A NET EARNINGS REQUIREMENT PRIOR TO THE ISSUANCE OF SECURITIES UNDER THE MORTGAGE. Unless otherwise provided in the applicable Prospectus Supplement, or supplement thereto, the Company will issue the Bonds on the basis of Class "A" Bonds issued under the 1940 Indenture. (See "DESCRIPTION OF THE 1940 INDENTURE - Issuance of Additional Bonds" for a description of the requirements for the issuance of bonds under the 1940 Indenture, which requirements are generally more restrictive than those for the issuance of securities under the Mortgage.) RELEASE OF PROPERTY Unless an Event of Default (hereinafter defined) shall have occurred and be continuing, the Company may obtain the release from the Lien of the Mortgage of any Funded Property, except for cash held by the Trustee, upon delivery to the Trustee of cash equal in amount to the amount, if any, that the Cost of the property to be released (or, if less, the fair value of such property at the time it became Funded Property) exceeds the aggregate of: (1) the principal amount, subject to certain limitations, of obligations secured by purchase money mortgages upon the property to be released delivered to the Trustee; 11 15 (2) the Cost or fair value (whichever is less) of certified Property Additions not constituting Funded Property after certain deductions and additions, primarily including adjustments to offset property retirements (except that such adjustments need not be made if such Property Additions were acquired or made within the 90-day period preceding the request for such release); (3) an amount equal to 133-1/3% of the aggregate principal amount of securities the Company would be entitled to issue on the basis of Retired Securities or Retired Prior Lien Bonds (with such entitlement being waived by operation of such release); (4) the amount of cash deposited with, or the principal amount of obligations secured by purchase money mortgages upon the property released and delivered to, the Trustee or other holder of a lien prior to the Lien of the Mortgage; (5) an amount equal to 133-1/3% of the aggregate principal amount of securities Outstanding under the Mortgage and delivered to the Trustee (with such Securities to be canceled by the Trustee); and (6) any taxes and expenses incidental to any sale, exchange, dedication or other disposition of the property to be released. (Section 803) Unless an Event of Default shall have occurred and be continuing, property which is not Funded Property may generally be released from the Lien of the Mortgage without depositing any cash or property with the Trustee as long as (a) the aggregate amount of Cost or fair value (whichever is less) of all Property Additions which do not constitute Funded Property (excluding the property to be released) after certain deductions and additions, primarily including adjustments to offset property retirements, is not less than zero or (b) the Cost or fair value (whichever is less) of property to be released does not exceed the aggregate amount of the Cost or fair value (whichever is less) of Property Additions acquired or made within the 90-day period preceding the release. (Section 804) The Mortgage provides simplified procedures for the release of property which has been released from the lien of Class "A" Mortgages, minor properties and property taken by eminent domain, and provides for dispositions of certain obsolete property and grants or surrender of certain rights without any release or consent by the Trustee. If any property released from the Lien of Mortgage continues to be owned by the Company after such release, the Mortgage will not become a lien on any improvement, extension or addition to such property or renewals, replacements or substitutions of or for any part or parts of such property. (Article Eight) WITHDRAWAL OF CASH Subject to certain limitations, unless an Event of Default shall have occurred and be continuing, cash held by the Trustee may (1) be withdrawn by the Company (a) to the extent of the Cost or fair value (whichever is less) of Property Additions not constituting Funded Property, after certain deductions and additions, primarily including adjustments to offset retirements or (b) in an amount equal to 133-1/3% of the aggregate principal amount of securities that the Company would be entitled to issue under the Mortgage on the basis of Retired Securities or Retired Prior Lien Bonds (with the entitlement to such issuance being waived by operation of such withdrawal) or (c) in an amount equal to 133-1/3% of the aggregate principal amount of any securities Outstanding under the Mortgage and issued under the Mortgage and delivered to the Trustee, or (2) upon the request of the Company, be applied to (a) the purchase of securities issued under the Mortgage (at prices not exceeding 133-1/3% of the principal amount thereof) or (b) the redemption or payment at Stated Maturity of securities issued under the Mortgage (with any securities received by the Trustee pursuant to these provisions being canceled by the Trustee) (Section 806); provided, however, that cash deposited with the Trustee as the basis for the authentication and delivery of securities, as well as cash representing a payment of principal of Class "A" Bonds, may only be withdrawn in an amount equal to the aggregate principal amount of securities the Company would be entitled to issue under the Mortgage on any basis (with the entitlement to such issuance being waived by operation of such withdrawal), or may, upon the request of the Company, be applied to the purchase redemption or payment of securities issued under the Mortgage at prices not exceeding, in the aggregate, the principal amount thereof. (Sections 405 and 702) 12 16 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE The Company may not consolidate with or merge into any other corporation or convey, transfer or lease the Mortgaged Property as or substantially as an entirety to any Person unless (a) such transaction is on such terms as will fully preserve in all material respects the Lien and security of the Mortgage and the rights and powers of the Trustee and the Holders and (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or other transfer, or which leases, the Mortgaged Property as or substantially as an entirety is a corporation organized and existing under the laws of the United States of America, any State or Territory thereof or the District of Columbia, and such corporation executes and delivers to the Trustee a supplemental indenture, which contains an assumption by such corporation of the Company's obligations under the Mortgage and which contains a grant, conveyance, transfer and mortgage by such corporation confirming the Lien of the Mortgage on the Mortgaged Property and subjecting to such Lien all property thereafter acquired by such corporation which shall constitute an integral part, or be essential to the use or operation of, any Mortgage Property or a renewal, replacement or substitution of or for any part thereof. (Section 1301) MODIFICATION OF THE MORTGAGE Without the consent of any Holders, the Company and the Trustee may enter into one or more supplemental indentures for certain purposes, including any of the following: (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company in the Mortgage and in the securities; or (b) to add one or more covenants of the Company or other provisions for the benefit of all Holders or for the benefit of the Holders of, or to remain in effect only so long as there shall be outstanding, securities issued under the Mortgage of one or more specified series, or one or more tranches thereof, or to surrender any right or power conferred upon the Company by the Mortgage; or (c) to correct or amplify the description of any property at any time subject to the Lien of the Mortgage, or to subject to the Lien of the Mortgage additional property; or (d) to change or eliminate any provision of the Mortgage or to add any new provision to the Mortgage, provided that, if such change, elimination or addition adversely affects the interests of the Holders of the securities of any series or tranche in any material respect, such change, elimination or addition will become effective with respect to such series or tranche only when no security of such series or tranche remains Outstanding under the Mortgage; or (e) to establish the form or terms of the securities of any series or tranche as permitted by the Mortgage; or (f) to cure any ambiguity, to correct or supplement any provision therein which may be defective or inconsistent with any other provision therein, or to comply with the rules or regulations of any national securities exchange on which any of the securities issued under the Mortgage may be listed, or to change, alter, modify, vary or eliminate any of the provisions thereof or to add other provisions to the Mortgage, so long as such other changes, alterations, modifications, variations, eliminations or additions do not adversely affect the interests of the Holders of securities of any series or tranche in any material respect, unless they are expressly stated to become effective only as to securities which are not then Outstanding. Without limiting the generality of the foregoing, if the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date of the Mortgage in such a way as to require changes to the Mortgage or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the Mortgage or at any time thereafter, were required by the Trust Indenture Act to be contained in the Mortgage, the Company and the Trustee may, without the consent of any Holders, enter into one or more supplemental indentures to evidence or effect such amendments. (Section 1401) 13 17 For most purposes not described above, the consent of the Holders of not less than a majority in aggregate principal amount of the securities of all affected series then Outstanding under the Mortgage is required for the purpose of amending or modifying the Mortgage pursuant to one or more supplemental indentures; provided, however, that no such amendment or modification may, without the consent of each Holder of the Outstanding securities of each series or tranche directly affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any security issued under the Mortgage, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or impair the right to institute suit for the enforcement of any such payment on or after the maturity thereof, (b) permit the creation of any lien ranking prior to the Lien of the Mortgage with respect to all or substantially all of the Mortgaged Property or terminate the Lien of the Mortgage, or (c) reduce the percentage in principal amount of the Outstanding securities of such series or tranche, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of the Mortgage or of any default thereunder and its consequences, or reduce the requirements for quorum or voting. A supplemental indenture which changes or eliminates any covenant or other provision of the Mortgage which has expressly been included solely for the benefit of the Holders of, or which is to remain in effect only so long as there shall be Outstanding securities of one or more specified series, or one or more tranches thereof, or modifies the rights of the Holders of securities such series or tranches with respect to such covenants or other provision, will not be deemed to affect the rights under the Mortgage of Holders of the securities of any other series or tranche. (Section 1402) WAIVER The Holders of at least a majority in aggregate principal amount of all affected Outstanding securities issued under the Mortgage may waive the Company's obligations to comply with certain covenants of the Mortgage, provided that such waiver occurs before the time such compliance is required. (Section 609) EVENTS OF DEFAULT Each of the following events constitutes an Event of Default under the Mortgage: (1) failure to pay interest on any security issued under the Mortgage within 90 days after the same becomes due; (2) failure to pay principal or premium, if any, on any security issued under the Mortgage within three business days after its due date; (3) failure to perform or breach of any covenant or warranty of the Company in the Mortgage (other than as referred to in (1) or (2) above) for a period of 90 days after there has been given to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 30% in principal amount of Outstanding securities issued under the Mortgage, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default," unless the Trustee, or the Trustee and the Holders of a principal amount of securities not less than the principal amount of securities the Holders of which gave such notice, as the case may be, agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and such Holders, as the case may be, will be deemed to have agreed to an extension of such period if corrective action has been initiated by the Company within such period and is being diligently pursued; (4) certain events relating to reorganization, bankruptcy and insolvency of the Company and appointment of a receiver or trustee for its property; and (5) the occurrence of a matured event of default under any Class "A" Mortgage; provided that the waiver or cure of any such event of default and the rescission and annulment of the consequences thereof shall constitute a waiver of the corresponding Event of Default under the Mortgage and a rescission and annulment of the consequences thereof. (Section 1001) 14 18 The Trust Indenture Act currently requires that the Company give the Trustee, not less often than annually, a brief statement as to the Company's compliance with the conditions and covenants under the Mortgage. REMEDIES If an Event of Default occurs and is continuing, then the Trustee or the Holders of not less than a majority in principal amount of securities then Outstanding under the Mortgage may declare the principal amount (or if the securities are Discount Securities, such portion of the principal amount as may be provided for such Discount Securities pursuant to the terms of the Mortgage) of all of the securities Outstanding under the Mortgage together with premium, if any, and interest accrued, if any, thereon to be immediately due and payable. At any time after such declaration of the maturity of the securities then Outstanding, but before the sale of any of the Mortgaged Property and before a judgment or decree for payment of money shall have been obtained by the Trustee as provided in the Mortgage, the Event or Events of Default giving rise to such declaration of maturity will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (1) all overdue interest, if any, on all securities then Outstanding under the Mortgage; (2) the principal of and premium, if any, on any securities then Outstanding under the Mortgage which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such securities; and (3) all amounts due to the Trustee as compensation and reimbursement as provided in the Mortgage; and (b) any other Event or Events of Default other than the non-payment of the principal of securities which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in the Mortgage. (Sections 1002 and 1017) The Mortgage provides that, under certain circumstances and to the extent permitted by law, if an Event of Default occurs and is continuing, the Trustee has the power to take possession of, and to hold, operate and manage, the Mortgaged Property, or with or without entry, sell the Mortgaged Property. If the Mortgaged Property is sold, whether by the Trustee or pursuant to judicial proceedings, the principal of the securities Outstanding under the Mortgage, if not previously due, will become immediately due, together with premium, if any, and any accrued interest (including interest upon overdue installments of interest at the same rates respectively as were born by the respective securities on which installments of interest were overdue). (Sections 1003, 1004 and 1005) If an Event of Default occurs and is continuing, the Holders of a majority in principal amount of the securities then Outstanding under the Mortgage will have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (a) such direction does not conflict with any rule of law or with the Mortgage, and could not involve the Trustee in personal liability in circumstances where indemnity would not, in the Trustee's sole discretion, be adequate and (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such discretion. (Section 1016) The Mortgage provides that no Holder of any security will have any right to institute any proceeding, judicial or otherwise, with respect to the Mortgage for the appointment of a receiver or for any other remedy thereunder unless (a) such Holder has previously given to the Trustee written notice of a continuing Event of Default; (b) the Holders of not less than a majority in aggregate principal amount of the securities then Outstanding under the Mortgage have made written request to the Trustee to institute proceedings in respect of such Event of Default and have offered the Trustee reasonable indemnity against costs and liabilities incurred in complying with such request; and (c) the Trustee has refused, or for sixty days after receipt of such Notice, the Trustee has failed, to institute any such proceeding and no direction inconsistent with such request has been given to the Trustee by the 15 19 Holders of a majority in aggregate principal amount of securities then Outstanding under the Mortgage. Furthermore, no Holder will be entitled to institute any such action if and to the extent that such action would disturb or prejudice the rights of the other Holders. (Section 1011) Notwithstanding that the right of a Holder to institute a proceeding with respect to the Mortgage is subject to certain conditions precedent, each Holder of a security has the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and interest (including interest upon overdue interest), if any, on such security when due and to institute suit for the enforcement of any such payment, and such rights may not be impaired without the consent of such Holder. (Section 1012) The Mortgage obligates the Trustee to give the Holders notice of any default under the Mortgage to the extent required by the Trust Indenture Act, unless such default shall have been cured or waived, except that no such notice to Holders of a default of the character described in paragraph (3) under "Event of Default" shall be given until at least 60 days after the occurrence thereof. (Section 1102) The Trust Indenture Act currently permits the Trustee to withhold notices of default (except for certain payment defaults) if the Trustee in good faith determines the withholding of such notice to be in the interests of the Holders. As a condition precedent to certain actions by the Trustee in the enforcement of the Lien of Mortgage and institution of action on the securities Outstanding under the Mortgage, the Trustee may require adequate indemnity against costs, expenses and liabilities to be incurred in connection therewith. (Sections 1011 and 1101) In addition to every other right and remedy provided in the Mortgage, the Trustee may exercise any right or remedy available to the Trustee in its capacity as owner and Holder of Class "A" Bonds which arises as a result of a default or matured event of default under any Class "A" Mortgage, whether or not an Event of Default under the Mortgage has occurred and is continuing. (Section 1020) DEFEASANCE Upon request of the Company, any securities Outstanding under the Mortgage, or any portion of the principal amount thereof, will be deemed to have been paid for purposes of the Mortgage, and the entire indebtedness of the Company in respect thereof will be deemed to have been satisfied and discharged, if there has been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust: (a) money in the amount which will be sufficient, or (b) Eligible Obligations (as described below), which do not contain provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide monies which, together with the money, if any, deposited with or held by the Trustee, will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such securities or portions thereof. (Section 901) For this purpose, Eligible Obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States of America, entitled to the benefit of the full faith and credit thereof, and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof. While the Company knows of no legal precedent on point, it is possible that, for federal income tax purposes, any deposit contemplated in the preceding paragraph could be treated as a taxable exchange of the related securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, Holders of such securities would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their securities. In addition, such Holders thereafter would be required to recognize for federal income tax purposes a share of the income, gain or loss of the trust. The amount so required to be recognized could be different from the amount that would be recognized in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of any such deposit. RESIGNATION OF THE TRUSTEE The Trustee may resign at any time by giving written notice thereof to the Company or may be removed at any time by act of the Holders of a majority in principal amount of securities then Outstanding delivered to the Trustee and the Company. No resignation or removal of the Trustee and no appointment of a successor trustee will 16 20 become effective until the acceptance of appointment by a successor trustee in accordance with the requirements of the Mortgage. So long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing, if the Company has delivered to the Trustee a resolution of its Board of Directors appointing a successor trustee and such successor has accepted such appointment in accordance with the terms of the Mortgage, the Trustee will be deemed to have resigned and the successor will be deemed to have been appointed as trustee in accordance with the Mortgage. (Section 1110) MORE RESTRICTIVE PROVISIONS OF CLASS "A" MORTGAGES The Mortgage is less restrictive upon the Company in certain respects than is either the 1940 Indenture or the ISU 1923 Indenture, but the Class "A" Bonds issued under either of those indentures and delivered to the Trustee will be entitled to the benefits of more restrictive provisions of those indentures (see "DESCRIPTION OF THE 1940 INDENTURE" and "DESCRIPTION OF THE ISU 1923 INDENTURE" below). However, pursuant to the Mortgage, the Trustee, as holder of the Class "A" Bonds, will vote such Class "A" Bonds in favor of certain amendments to the 1940 Indenture and ISU 1923 Indenture. (Section 705; see "Voting of Class "A" Bonds" under each of "DESCRIPTION OF THE 1940 INDENTURE" and "DESCRIPTION OF THE ISU 1923 INDENTURE" below). RELATIONSHIP WITH THE TRUSTEE The Trustee or an affiliate provides general banking services to the Company including (i) acting as a depositary for certain Company funds and (ii) issuing a $15,000,000 line of credit to the Company. As of March 31, 1997, the line of credit was being used to support commercial paper. Additionally, the Trustee has a $45,000,000 credit agreement with the lessor of the Company's nuclear fuel supporting the Company's nuclear fuel lease. The Trustee is also the 1940 Indenture Trustee, the ISU 1923 Corporate Trustee, the Senior Unsecured Indenture Trustee and the Subordinated Indenture Trustee (each as defined below). As such, the Trustee would have a conflicting interest for purposes of the Trust Indenture Act if an Event of Default were to occur under the 1940 Indenture, the ISU 1923 Indenture, the Senior Unsecured Indenture or the Subordinated Indenture. In any such case, the Trustee may be required to eliminate such conflicting interest by resigning as the Trustee, the 1940 Indenture Trustee, the ISU 1923 Corporate Trustee, the Senior Unsecured Indenture Trustee or the Subordinated Indenture Trustee. There are other instances under the Trust Indenture Act which would require the resignation of the Trustee, such as an affiliate of the Trustee acting as underwriter with respect to any of the Securities. DESCRIPTION OF THE 1940 INDENTURE GENERAL The summaries of the 1940 Indenture set forth below do not purport to be complete and are subject to the detailed provisions of the 1940 Indenture, a copy of which was previously filed with the Commission, is listed as an exhibit to the Registration Statement of which this Prospectus is a part, and is incorporated herein by reference. Capitalized terms used in this section which are not otherwise defined in this Prospectus shall have the meanings ascribed to them in the 1940 Indenture. Wherever particular provisions or terms defined in the 1940 Indenture are referred to herein, such provisions or definitions are incorporated by reference as part of the statements made herein, and such statements are qualified in their entirety by such reference. References to article and section numbers in this section, unless otherwise indicated, are references to article and section numbers of the 1940 Indenture. SECURITY The 1940 Indenture constitutes a direct first mortgage lien on substantially all of the property and franchises of the Company (other than expressly excepted property and other than properties owned by Iowa Southern at the time of the IE-ISU merger on December 31, 1993), subject only to permitted encumbrances and liens. Substantially all property and franchises (other than expressly excepted property) hereafter acquired by the Company will become subject to the lien of the 1940 Indenture, subject only to permitted liens and encumbrances and liens and encumbrances, if any, existing or placed on such after-acquired property at the time of acquisition thereof. The lien 17 21 of the 1940 Indenture on the property owned by Iowa Southern at the time of the IE-ISU merger, and extensions and additions appurtenant to such property, are junior to the lien of the ISU 1923 Indenture. The 1940 Indenture excepts from the lien thereof all cash, securities, contracts, and bills, notes and accounts receivable acquired in the ordinary course of business which are not specifically pledged under the 1940 Indenture and all tangible personal property purchased or held for sale in the ordinary course of business or consumable in the operation of the plants or system of the Company, automobiles, buses, trucks and similar vehicles. (Granting Clauses) Any bonds issued under the 1940 Indenture as the basis for the issuance of Bonds under the Mortgage will be secured equally and ratably with the bonds of all other series then outstanding under the 1940 Indenture. EFFECT OF THE IE-ISU MERGER ON THE 1940 INDENTURE The merger of IE and ISU did not impair the lien of the 1940 Indenture or any of the rights or powers of the 1940 Indenture Trustee or the bondholders under the 1940 Indenture. (Section 133) Subsequent to that merger, the Company became the successor to IE under the 1940 Indenture. ISSUANCE OF ADDITIONAL BONDS The 1940 Indenture does not fix an overall limitation on the aggregate principal amount of the bonds of all series that may be issued or outstanding thereunder. (Section 3) Generally, additional bonds of any series may be issued, subject to the provisions of the 1940 Indenture, in a principal amount equal to: (a) 60% of Net Bondable Additions not previously utilized under the 1940 Indenture resulting from the acquisition by purchase, construction or otherwise of Property Additions (Article IV); (b) the principal amount of bonds, previously authenticated under the 1940 Indenture, which have been retired or for the retirement of which the 1940 Indenture Trustee holds the necessary funds, other than bonds redeemed through the operation of cash sinking funds and other than retired bonds used to satisfy the maintenance and renewal provisions of the 1940 Indenture (Article VI); or (c) the amount of cash deposited with the 1940 Indenture Trustee as the basis for the issuance of such bonds, which cash may be applied to the retirement of bonds or may be withdrawn in lieu of the authentication of an equal principal amount of bonds to whose authentication and delivery the Company would be entitled under the provisions referred to in clauses (a) and (b). (Article V) No such bonds in any event may be issued under (a) or (c), or under (b) if the bonds to be issued bear a higher rate of interest than that borne by the bonds retired or being retired (except in case such bonds mature within 2 years), unless (i) the Net Earnings of the Company for a 12 months' period within the immediately preceding 15 months' period shall have been at least equal to two times the aggregate amount of annual interest charges on all bonds then outstanding under the 1940 Indenture, including the bonds then applied for, and (ii) at least 85% of such required minimum amount of Net Earnings consists of Net Operating Revenues from the Public Utility Property of the Company. (Articles IV, V, and VI) Bonds issuable under the 1940 Indenture are available as the basis for the issuance of securities under the Mortgage. As of March 31, 1997, on the basis of the most restrictive provisions described above, the Company would have been entitled to issue an aggregate of at least $241 million of additional bonds under the 1940 Indenture. ACQUISITION OF PROPERTY SUBJECT TO PRIOR LIENS The 1940 Indenture prohibits the Company from acquiring any property subject to a prior lien, or placing any prior lien on property at the time of acquisition thereof, if either the principal amount of indebtedness secured by prior liens on such property exceeds 60% of the cost or the fair value of such property, whichever shall be less, or the Net Earnings of the Company for a period of 12 months within the 15 months immediately preceding the month in which the property is to be acquired shall not have been at least equal to two times the aggregate amount of the 18 22 annual interest charges on the Secured Bonded Debt of the Company; provided, however, that if the Net Earnings of the Company for the above-stated period shall have been at least equal to three times the aggregate amount of the annual interest charges on the Secured Bonded Debt of the Company, then the 60% limitation shall not apply. In the case of each of the foregoing Net Earnings requirements, such Net Earnings must consist of Net Operating Revenues from Public Utility Property to an extent at least equal to 85% of two or three times, as the case may be, the said aggregate amount of annual interest charges. (Section 83) MAINTENANCE AND RENEWAL The 1940 Indenture provides that the Company will, for each year, pay or cause to be paid to the Trustee, an amount in cash, as and for a renewal fund, equal to 2-1/2% (or such different percentage as may be fixed upon certification by an independent engineer that such change in percentage rate is desirable and justified) of the average gross book value during such year of all of the depreciable tangible Public Utility Property of the Company (with certain specified exceptions). The percentage is currently set at 2-1/2%. The Company's obligation to pay such amount to the Trustee in cash may at the option of the Company be satisfied in whole or in part by the certification of unused Gross Bondable Additions or the certification of unused bond retirements, or both. (Section 74) The 1940 Indenture also provides (i) that the Company shall maintain the mortgaged properties in good repair and working order; (ii) that the Company, upon written request served upon it and the Trustee by the holders of at least 25% in principal amount of the bonds outstanding, shall cause such properties to be inspected by an independent engineer (not more often than at five-year intervals) to determine whether they have been so maintained and whether any property, not retired on the books, should be so classified for the purpose (among others) of computing Net Bondable Additions; and (iii) that the Company shall make good any deficiency in maintenance disclosed by such engineer's report as rendered or as modified by arbitration. (Section 73) LIMITATIONS ON DIVIDENDS ON COMMON STOCK The 1940 Indenture prohibits the Company from declaring or paying any dividends (except stock dividends or dividends paid out of the proceeds of sale of stock), or making other distributions on, or acquisitions of, stock unless immediately after such dividend, distribution or acquisition the net income of the Company available for dividends (as defined), for the period from December 31, 1945, to and including the date of such dividend, distribution or acquisition, plus the sum of $250,000 shall at least equal all payments made in respect of all such dividends, distributions or acquisitions during said period; provided that such restriction shall not apply to the acquisition of stock out of the proceeds from the sale of, or in exchange for, any other shares of stock or securities representing an equity interest subordinate to all debts, secured or unsecured. (Section 85) Giving effect to the use of the proceeds of the Securities offered hereby, retained earnings are not restricted under this provision. 19 23 MODIFICATION OF THE 1940 INDENTURE In general, modifications or alterations of the 1940 Indenture and indentures supplemental thereto and of the rights and obligations of the Company and of the holders of the bonds may, with the approval of the Company, be made at a meeting of bondholders upon the affirmative vote of the holders of 75% or more of the aggregate principal amount of the bonds entitled to vote with respect to the matter involved, but no such modifications or alterations are permitted with respect to certain basic matters, such as terms of payment of principal or interest on the bonds or the creation of liens ranking prior to, or on a parity with, the lien of the 1940 Indenture. (Section 167) (See "Voting of Class "A" Bonds" below.) DEFAULTS AND NOTICE THEREOF Defaults under the 1940 Indenture are defined in substance as being (a) failure to pay principal or any installment of interest on any bond on the due date; (b) failure to observe any covenant or condition prescribed by the provisions of any sinking fund created for the benefit of bonds of any series; (c) failure to perform any other covenant or agreement of the 1940 Indenture, which failure shall continue for a period of 60 days after a written demand that such failure be cured has been mailed to the Company by the Trustee or to the Company by the holders of 15% in principal amount of the bonds; (d) certain events relating to reorganization, bankruptcy and insolvency of the Company or the appointment of a receiver or trustee of the Company's property; (e) final judgment in excess of $100,000 against the Company which is not discharged or stayed within 30 days; or (f) the assumption by any governmental agency or any court at the instance of any governmental agency of custody of the whole or any substantial part of the Trust Estate or of control over the Company's affairs or operations to the exclusion of management by the Company. (Section 105) Upon the occurrence of a Default, the 1940 Indenture Trustee may, and upon request of the holders of a majority in principal amount of the bonds shall (and the holders of at least 25% in principal amount of the bonds may, by notice in writing to the Company), declare the principal of and interest on all the bonds to be immediately due and payable. (Section 107) The 1940 Indenture Trustee is required to give notice of any Default to holders of bonds whose names are on file with it within 90 days after the occurrence of a Default known to it, unless such Default has been cured prior to the giving of such notice and except that such notice may be withheld, other than as to a Default in payment of principal or interest or of any installment of any sinking fund, if the 1940 Indenture Trustee determines in good faith that such withholding is in the interest of the holders of bonds. (Section 106) The holders of not less than a majority in principal amount of bonds then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the 1940 Indenture Trustee, or exercise any trust or power conferred upon the 1940 Indenture Trustee. (Section 110) The Company must file an annual Certificate with the 1940 Indenture Trustee as to compliance with the conditions and covenants of the 1940 Indenture and as to the absence of default with respect to any of the covenants contained in the 1940 Indenture. (Section 103) VOTING OF CLASS "A" BONDS The Trustee will, as holder of any Class "A" Bonds issued under the 1940 Indenture, attend such meetings of bondholders under the 1940 Indenture, or deliver its proxy in connection therewith, as relate to matters with respect to which it is entitled to vote or consent. The Mortgage provides that, so long as no Event of Default as defined in the Mortgage has occurred or is continuing, the Trustee will, as holder of such Class "A" Bonds, vote or consent: (a) in favor of amendments or modifications to the 1940 Indenture of substantially the same tenor and effect as the following, together with all amendments and modifications required to effectuate the following: (i) to provide that, whenever the 1940 Indenture requires authorization by, or a resolution of, the Board of Directors for the issuance of a series of bonds or the determination of the 20 24 terms thereof, the requirement shall be satisfied if the action taken would be sufficient for the issuance of a series of bonds, or the determination of the terms thereof, under the Mortgage; (ii) to eliminate the renewal fund and to provide that, to the extent Property Additions have been taken as a credit, or cash held by the Trustee has been deposited, to satisfy the renewal fund requirements (or to satisfy any sinking fund requirement which is no longer in effect), such Property Additions and cash may be used for any purpose under the 1940 Indenture (including as a basis for the issuance of bonds) as if they had never been so credited or deposited; (iii) to permit bonds to be issued in a principal amount equal to 75%, instead of 60%, of Net Bondable Additions; (iv) to eliminate the Net Earnings requirements for all purposes, including in connection with the issuance of bonds; (v) to broaden the definition of "Property Additions" to include all tangible property owned by the Company and subject to the lien of the 1940 Indenture; (vi) to eliminate the restrictions on the payment of dividends on, or the making of other distributions on, or acquisitions of, stock; (vii) to eliminate most restrictions on purchase money obligations which may be received as consideration for the release of property from the lien of the 1940 Indenture; (viii) to permit the release, without compliance with other provisions of the 1940 Indenture, of any property provided that (1) the release will not impair the electric business of the Company in contravention of the provisions of the 1940 Indenture and (2) the fair value of property released pursuant to this provision, together with the fair value of all other property so released in the then current calendar year, shall not exceed the greater of $5,000,000 and 3% of the aggregate principal amount of bonds then outstanding under the 1940 Indenture; (ix) to modify release provisions to delete the requirement that the property to be released shall "no longer be useful, necessary, profitable or advantageous in the judicious management and maintenance of the Trust Estate or in the conduct of the business of the Company" and substituting therefor the requirement that the release of the property would not adversely affect the Company's electric business; (x) to permit the withdrawal by the Company, without compliance with other provisions of the 1940 Indenture, of cash in an amount, together with other amounts paid over to the Company pursuant to this provision in the then current calendar year, up to the greater of $5,000,000 and 3% of the aggregate principal amount of the bonds then outstanding under the 1940 Indenture; provided that such cash must be expended for Property Additions; (xi) to increase the amount of cash withdrawable by the Company on the basis of retired bonds from 100% of the principal amount of such bonds to 133-1/3% of such principal amount; (xii) to eliminate most restrictions on the acquisition of property subject to a prior lien; (xiii) to limit the insurance coverage that must be maintained by the Company to fire insurance only and to raise the minimum dollar amount of any one fire loss which must be payable to the 1940 Indenture Trustee from $10,000 to an amount equal to the greater of 21 25 $5,000,000 and 3% of the aggregate principal amount of bonds then outstanding under the 1940 Indenture; (xiv) to modify the definition of "Defaults" under the 1940 Indenture to be substantially the same as "Events of Default" under the Mortgage; (xv) to modify the provisions of the 1940 Indenture for the acceleration of the maturity of bonds to provide that (1) action by the holders of a majority (rather than the current 25%) in principal amount of the then outstanding bonds is required to accelerate the maturity of all outstanding bonds upon Default and (2) any such acceleration and its consequences are automatically rescinded (rather than at the option of the holders as is currently provided) upon the curing of all Defaults; (xvi) to reduce the quorum requirements for bondholder meetings from 75% to a majority; and (xvii) to modify the remedies provisions to increase to a majority from 25% the percentage of the principal amount of outstanding bonds, the holders of which must have requested that the 1940 Indenture Trustee take action before individual holders may institute suits against the Company. (b) with respect to any other amendments or modifications to the 1940 Indenture as follows: the Trustee will vote all Class "A" Bonds issued under the 1940 Indenture then held by it, or consent with respect thereto, proportionately with what is reasonably believed to be the vote or consent of the holders of all other bonds Outstanding under the 1940 Indenture, the holders of which are eligible to vote or consent; provided, however, that (i) at any time the Class "A" Bonds under the 1940 Indenture held by the Trustee constitute a majority of the principal amount of the Outstanding bonds under the 1940 Indenture or (ii) at any time such Class "A" Bonds held by the Trustee constitute less than such a majority but there is a proposed amendment or modification of the 1940 Indenture which, if it were an amendment or modification of the Mortgage (See "DESCRIPTION OF THE COLLATERAL TRUST BONDS - Modification of the Mortgage"), would require the consent of Holders, then, in either case, the Trustee may only vote such Class "A" Bonds in accordance with the vote of the Holders of at least a majority of the principal amount of the bonds casting a vote and shall seek that vote in accordance with the provisions of the Mortgage applicable to required votes of Holders in respect of amendments or modifications to the Mortgage. DESCRIPTION OF THE ISU 1923 INDENTURE GENERAL The summaries of the ISU 1923 Indenture set forth below do not purport to be complete and are subject to the detailed provisions of the ISU 1923 Indenture, a copy of which was previously filed with the Commission, is listed as an exhibit to the Registration Statement of which this Prospectus is a part, and is incorporated herein by reference. Capitalized terms used in this section which are not otherwise defined in this Prospectus shall have the meanings ascribed to them in the ISU 1923 Indenture. Wherever particular provisions or terms defined in the ISU 1923 Indenture are referred to in this section, such provisions or definitions are incorporated by reference as part of the statements made in this section, and such statements are qualified in their entirety by such reference. References to article and section numbers herein, unless otherwise indicated, are references to article and section numbers of the ISU 1923 Indenture. 22 26 SECURITY The ISU 1923 Indenture constitutes a direct first mortgage lien upon substantially all of the property and rights of Iowa Southern existing at the time of the IE-ISU merger on December 31, 1993 and upon extensions and additions appurtenant to such property, with certain exceptions for certain types of property (including accounts receivable) as provided in the ISU 1923 Indenture, and subject only to permitted liens. (Granting Clauses) Any bonds issued under the ISU 1923 Indenture as the basis for the issuance of Bonds under the Mortgage will be secured equally and ratably with the bonds of all other series then outstanding under the ISU 1923 Indenture. EFFECT OF THE IE-ISU MERGER ON THE ISU 1923 INDENTURE The merger of IE and ISU did not impair the lien of the ISU 1923 Indenture or any of the rights or powers of the ISU Indenture Trustees or the bondholders under the ISU 1923 Indenture. (Article XVI) Subsequent to that merger, the Company became the successor to ISU under the ISU 1923 Indenture. ISSUANCE OF ADDITIONAL BONDS The ISU 1923 Indenture does not fix an overall limitation on the aggregate principal amount of the bonds of all series that may be issued or outstanding thereunder. (Section 2.01) Provided that the Earnings Applicable to Bond Interest for a period of twelve consecutive calendar months within the fifteen months immediately preceding issuance are at least twice the annual interest requirements of the bonds applied for and all bonds and Prior Lien Bonds outstanding, additional bonds of any series may be issued: (a) in an aggregate principal amount not exceeding 60% of the Cost or Fair Value, whichever is less, of Property Additions after adjustments to offset retirements and amounts removed from the utility plant or fixed capital accounts of the former Iowa Southern (Article V); (b) in an aggregate principal amount not exceeding the aggregate principal amount of bonds which shall have been retired (other than bonds retired through the use of certain funds) (Article VI); (c) upon deposit of cash with the ISU Corporate Trustee, in an amount equal to the principal amount of the bonds to be so issued (and such cash may be withdrawn by the Company in a sum equal to the aggregate principal amount of the bonds which could be issued under clause (a) or (b) above). (Article VII) Bonds issuable under the ISU 1923 Indenture are available as the basis for the issuance of securities under the Mortgage. As of March 31, 1997, on the basis of the most restrictive provisions described above, the Company would have been entitled to issue at least $167 million of additional bonds under the ISU 1923 Indenture. MAINTENANCE FUND The ISU 1923 Indenture provides that so long as bonds shall be outstanding, the Company will pay to the ISU Corporate Trustee annually, as a maintenance fund, a sum of money equal to 15% of the gross operating revenue of the Company derived during the calendar year preceding such payment from the operation of the physical properties subject to the lien of the ISU 1923 Indenture after deducting (1) all gross operating revenue derived during such period from the operation of property subject to a prior lien and (2) an amount equal to the total cost to the Company of electric energy and natural gas purchased by it (and allocable to operations of property subject to the lien of the ISU 1923 Indenture) during such period with certain deductions. The Company is entitled to credits against such annual payment for certain amounts expended for maintenance and repairs and Unapplied Balance of Property Additions, retired bonds, and other matters. Any moneys deposited by the Company with the ISU Corporate Trustee in the maintenance fund will, upon the request of the Company, be applied by the ISU Corporate Trustee to the purchase or redemption of bonds or may be withdrawn by the Company in certain circumstances. (Article XII) 23 27 SUBSTITUTIONS AND RELEASES Generally, property subject to the lien of the ISU 1923 Indenture may be released only upon the deposit or pledge with the ISU Corporate Trustee of cash, purchase money obligations, securities, or the certification of property additions or, in certain instances, upon the substitution of other property of equivalent value. The Company may also, under certain conditions, without release, terminate, change, or assent to the modification of leases, easements, franchises, and governmental permits. (Article XI) SATISFACTION AND DISCHARGE OF INDENTURE If the Company shall pay the principal of, premium (if any), and interest on all outstanding bonds issued under the ISU 1923 Indenture (bonds for the payment or redemption of which necessary funds have been deposited with the ISU Corporate Trustee being deemed paid), then the ISU Indenture Trustees may, and upon the request of the Company shall, cancel and discharge the lien of the ISU 1923 Indenture and reconvey to the Company the mortgaged and pledged property. (Article XIX) MODIFICATION OF THE ISU 1923 INDENTURE To the extent permitted by the terms of the ISU 1923 Indenture, modification or alteration of the ISU 1923 Indenture or any indenture supplemental thereto, and of the rights and obligations of the Company and of ISU bondholders, may be made with the consent of the Company by an affirmative vote of the holders of not less than 80% in principal amount of the outstanding bonds issued under the ISU 1923 Indenture and entitled to vote at a meeting of bondholders and by an affirmative vote of the holders of not less than 80% of the principal amount of such bonds of the series affected by the change; provided, however, that no such modification or alteration intended to effect or permit the extension of the maturity of the principal of any bond, the reduction in the rate of interest thereon, or any other modification in the terms of payment of such principal or interest, or the taking of certain other actions, such as creating liens ranking prior to, or on parity with, the lien of the ISU 1923 Indenture, shall be effective as to any bond the holder of which has not assented to such modification or alteration. (Article XX) (See "Voting of Class "A" Bonds" below.) The Company may fail or omit to comply with certain covenants or conditions of the ISU 1923 Indenture with the written consent of the holders of at least 66 2/3% of the principal amount of all outstanding bonds issued under the ISU 1923 Indenture. (Section 15.19) DEFAULTS AND NOTICE THEREOF Defaults under the ISU 1923 Indenture are defined in substance as being (a) failure to pay principal of, or premium (if any) on, any bond issued under the ISU 1923 Indenture; (b) failure to pay any installment of interest on any such bond, and such failure continues for 30 days; (c) failure to observe any covenant or condition prescribed by the provisions of any sinking fund created for the benefit of such bonds of any series; (d) failure by the Company to perform any other covenant or agreement in such bonds or in the ISU 1923 Indenture, and such failure continues for 60 days after written notice is given; and (e) certain events relating to reorganization, bankruptcy and insolvency of the Company, and the appointment of a receiver. (Section 15.01) The ISU 1923 Indenture Trustees are required to give notice of any default to bondholders within 90 days after the occurrence thereof, unless such default is cured before the giving of such notice (except in the case of certain defaults, notice of which is not to be given by such Trustees until at least 60 days after the occurrence thereof). The ISU Indenture Trustees may withhold notice of default (except in the payment of principal of, or interest or premium (if any) on, any of the bonds or in the payment of any sinking fund or purchase fund installment) if the ISU Corporate Trustee determines that such withholding is in the interest of the bondholders. (Section 17.11) Holders of a majority of the principal amount of outstanding bonds may direct the method, time, and place of conducting any proceedings for any remedy available to the ISU Indenture Trustees for any sale of the property subject to the lien of the ISU 1923 Indenture, or for the foreclosure of the ISU 1923 Indenture, or for the appointment of a receiver, or for the taking of any other action authorized by the ISU 1923 Indenture in respect of a default or refraining therefrom. (Section 15.05) 24 28 No holder of any bond or coupon shall have any right to any remedy under the ISU 1923 Indenture, unless such holder has given prior written notice to the ISU 1923 Indenture Trustees of the default, 25% in aggregate principal amount of the bonds outstanding have made prior written request to the ISU Corporate Trustee and have afforded reasonable opportunity to the 1923 ISU Indenture Trustees to pursue the remedy in the trustees' own names, and the ISU 1923 Indenture Trustees have been offered adequate indemnity for costs, expenses and liabilities which may be incurred thereby. (Section 15.15) The Company must file an annual Certificate with the ISU Corporate Trustee as to compliance with the conditions and covenants of the ISU 1923 Indenture and as to the absence of default with respect to any of the covenants contained in the ISU 1923 Indenture. (Section 14.03) VOTING OF CLASS "A" BONDS The Trustee will, as holder of any Class "A" Bonds issued under the ISU 1923 Indenture, attend such meetings of bondholders under the ISU 1923 Indenture, or deliver its proxy in connection therewith, as relate to matters with respect to which it is entitled to vote or consent. The Mortgage provides that, so long as no Event of Default as defined in the Mortgage has occurred or is continuing, the Trustee will, as holder of such Class "A" Bonds, vote or consent: (a) in favor of amendments or modifications to the ISU 1923 Indenture of substantially the same tenor and effect as the following, together with all amendments and modifications required to effectuate the following: (i) to provide that, whenever the ISU 1923 Indenture requires authorization by, or a resolution of, the Board of Directors or an Executive Committee thereof for the issuance of a series of bonds or the determination of the terms thereof, the requirement shall be satisfied if the action taken would be sufficient for the issuance of a series of bonds, or the determination of the terms thereof, under the Mortgage; (ii) to eliminate the maintenance fund and to provide that, to the extent Property Additions or bonds previously outstanding have been taken as a credit, or cash held by the ISU Corporate Trustee has been deposited, in each case to satisfy the Maintenance Fund Requirements, such Property Additions, previously outstanding bonds and cash may be used for any purpose under the ISU 1923 Indenture (including as a basis for the issuance of bonds) as if they had never been so credited or deposited; (iii) to permit bonds to be issued in a principal amount equal to 75%, instead of 60%, of Property Additions; (iv) to eliminate the Net Earnings requirements for all purposes, including in connection with the issuance of bonds; (v) to broaden the definition of "Property Additions" to include property not used by the Company in its electric, gas or steam business; (vi) to permit the release, without compliance with other provisions of the ISU 1923 Indenture, of any property, provided that (1) the fair value of property released pursuant to this provision, together with the fair value of all other property so released in the then current calendar year, shall not exceed an amount equal to the greater of $5,000,000 and 3% of the aggregate principal amount of bonds then outstanding under the ISU 1923 Indenture; (vii) to permit the withdrawal by the Company, without compliance with other provisions of the ISU 1923 Indenture, of cash in an amount, together with other amounts paid over to the Company pursuant to this provision in the then current calendar year, up to the greater of $5,000,000 and 3% of the aggregate principal amount of the bonds then outstanding 25 29 under the ISU 1923 Indenture; provided that such cash must be expended for Property Additions; (viii) to increase the amount of cash withdrawable by the Company on the basis of retired property from 100% of the cost or fair value of such property to 133-1/3% of such cost or fair value; (ix) to raise the minimum dollar amount of any one fire loss which must be payable to the ISU Indenture Trustees from $10,000 to an amount equal to the greater of $5,000,000 and 3% of the aggregate principal amount of bonds then outstanding under the ISU 1923 Indenture; (x) to modify the definition of "defaults" under the ISU 1923 Indenture to be substantially the same as "Events of Default" under the Mortgage; (xi) to modify the provisions of the ISU 1923 Indenture for the acceleration of the maturity of bonds to provide that (1) action by the holders of a majority (rather than the current 25%) in principal amount of the then outstanding bonds is required to accelerate the maturity of all outstanding bonds upon default and (2) any such acceleration and its consequences are automatically rescinded (rather than at the option of the holders as is currently provided) upon the curing of all defaults; (xii) to reduce the quorum requirements for bondholder meetings from 80% to a majority; and (xiii) to modify the remedies provisions to increase to a majority from 25% the percentage of the principal amount of bonds, the holders of which must have requested the ISU Corporate Trustee to take action before individual holders may institute suits against the Company. (b) with respect to any other amendments or modifications to the ISU 1923 Indenture, as follows: the Trustee will vote all Class "A" Bonds issued under the ISU 1923 Indenture then held by it, or consent with respect thereto, proportionately with what is reasonably believed to be the vote or consent of the holders of all other bonds outstanding under the ISU 1923 Indenture, the holders of which are eligible to vote or consent; provided, however, that (i) at any time such Class "A" Bonds under the ISU 1923 Indenture held by the Trustee constitute a majority of the principal amount of the Outstanding bonds under the ISU 1923 Indenture or (ii) at any time such Class "A" Bonds held by the Trustee constitute less than such a majority but there is a proposed amendment or modification of the ISU 1923 Indenture which, if it were an amendment or modification of the Mortgage (See "DESCRIPTION OF THE COLLATERAL TRUST BONDS - Modification of the Mortgage"), would require the consent of Holders, then, in either case, the Trustee may only vote such Class "A" Bonds in accordance with the vote of the Holders of at least a majority of the principal amount of the securities casting a vote and shall seek that vote in accordance with the provisions of the Mortgage applicable to required votes of Holders in respect of amendments or modifications to the Mortgage. 26 30 DESCRIPTION OF THE SENIOR UNSECURED INDENTURE GENERAL The Securities may be issued in one or more series under the Indenture (For Senior Unsecured Debt Securities) (the "Senior Unsecured Indenture") between the Company and The First National Bank of Chicago, as trustee (the "Senior Unsecured Indenture Trustee"). The summaries of the Senior Unsecured Indenture set forth below do not purport to be complete and are subject to the detailed provisions of the Senior Unsecured Indenture, a copy of which is filed with the Commission as an exhibit to the Registration Statement of which this Prospectus is a part and is incorporated in this section by reference. Capitalized terms used in this section which are not otherwise defined in this Prospectus shall have the meanings ascribed to them in the Senior Unsecured Indenture. Wherever particular provisions or terms defined in the Senior Unsecured Indenture are referred to in this section, such provisions or definitions are incorporated by reference as part of the statements made in this section, and such statements are qualified in their entirety by such reference. References to article and section numbers herein, unless otherwise indicated, are references to article and section numbers of the Senior Unsecured Indenture. The Securities issued under the Senior Unsecured Indenture (the "Senior Debentures") will be unsecured obligations of the Company and will rank on a parity with all other unsecured and unsubordinated debt of the Company. Senior Debentures shall not be afforded any protection under the Mortgage, pursuant to which various series of Collateral Trust Bonds may be issued. Reference is made to the Prospectus Supplement, or a supplement thereto, for a description of the following terms of the series of Senior Debentures in respect of which this Prospectus is being delivered: (1) the title of such series of Senior Debentures; (2) any limit on the aggregate principal amount of such Senior Debentures or the series of which they are a part; (3) the Person or Persons to whom interest on the Senior Debentures of such series shall be payable if other than the Persons in whose names such Senior Debentures are registered; (4) the date or dates on which the principal of any of such Senior Debentures will be payable; (5) the rate or rates (which may be fixed or variable) and/or the method of determination of such rate or rates at which any of such Senior Debentures will bear interest, if any, the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable and the Regular Record Date for any such interest payable on any Interest Payment Date; (6) the place or places where (i) the principal of, premium, if any, and interest on any of such Senior Debentures will be payable, (ii) registration of transfer of such Senior Debentures may be effected, (iii) exchanges of such Senior Debentures may be effected and (iv) notices and demands to or upon the Company in respect of such Senior Debentures may be served; the Security Registrar for such Senior Debentures and, if such is the case, that the principal of such Senior Debentures shall be payable without presentment or surrender thereof; (7) the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which any of such Senior Debentures may be redeemed, in whole or in part, at the option of the Company; (8) the obligation or obligations, if any, of the Company to redeem or purchase any of such Senior Debentures pursuant to any sinking fund or other mandatory redemption provisions or at the option of the Holder thereof, and the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which any of such Senior Debentures shall be redeemed or purchased, in whole or in part, pursuant to such obligation, and applicable exceptions to the requirements of a notice of redemption in the case of mandatory redemption or redemption at the option of the Holder; (9) the denominations in which any of such Senior Debentures will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (10) if other than the currency of the United States, the currency or currencies, including composite currencies, in which payment of the principal of and any premium and interest on any of such Senior Debentures will be payable; (11) if the principal of or any premium or interest on any of such Senior Debentures is to be payable, at the election of the Company or the Holder thereof, in a coin or currency other than in which such Senior Debentures are stated to be payable, the period or periods within which and the terms and conditions upon which, such election is to be made; (12) if the principal of or premium, if any, or interest on such Senior Debentures are to be payable, or are to be payable at the election of the Company or a Holder thereof, in securities or other property, the type and amount of such securities or other property, or the formulary or other method or other means by which such amount shall be determined, and the period or periods within which, and the terms and conditions upon which, any such election may be made; (13) if the amount payable in respect of principal of or any premium or interest on any of such Senior Debentures may be determined with reference to an index or other fact or event ascertainable outside the Senior Unsecured Indenture, the manner in which such amounts will be determined; (14) if other than the principal amount thereof, the portion of the principal amount of any of such Senior Debentures which shall be payable upon declaration of acceleration of the Maturity thereof; (15) any addition to the Events of Default applicable to any of such Senior Debentures and any addition to the covenants of the Company for the benefit of the Holders of such 27 31 Senior Debentures; (16) the terms, if any, pursuant to which such Senior Debentures may be converted into or exchanged for shares of capital stock or other securities of the Company or any other Person; (17) the obligations or instruments, if any, which shall be considered to be Eligible Obligations in respect of such Senior Debentures denominated in a currency other than Dollars or in a composite currency, and any additional or alternative provisions for the reinstatement of the Company's indebtedness in respect of such Senior Debentures after the satisfaction and discharge thereof; (18) if such Senior Debentures are to be issued in global form, (i) any limitations on the rights of the Holder or Holders of such Senior Debentures to transfer or exchange the same or to obtain the registration of transfer thereof, (ii) any limitations on the rights of the Holder or Holders thereof to obtain certificates therefor in definitive form in lieu of temporary form and (iii) any and all other matters incidental to such Senior Debentures; (19) if such Senior Debentures are to be issuable as bearer securities; (20) any limitations on the rights of the Holders of such Senior Debentures to transfer or exchange such Senior Debentures or to obtain the registration of transfer thereof, and if a service charge will be made for the registration of transfer or exchange of such Senior Debentures, the amount or terms thereof; (21) any exceptions to the provisions governing payments due on legal holidays or any variations in the definition of Business Day with respect to such Senior Debentures; and (22) any other terms of such Senior Debentures of such series, or any Tranche thereof, not inconsistent with the provisions of the Senior Unsecured Indenture. (Section 301) Senior Debentures may be sold at a substantial discount below their principal amount. Certain special United States federal income tax considerations applicable to Senior Debentures sold at an original issue discount may be described in the applicable Prospectus Supplement. In addition, certain special United States federal income tax or other considerations applicable to any Senior Debentures which are denominated in a currency or currency unit other than Dollars may be described in the applicable Prospectus Supplement. Except as may otherwise be described in the Prospectus Supplement, the covenants contained in the Senior Unsecured Indenture would not afford Holders of Senior Debentures protection in the event of a highly-leveraged transaction or change of control involving the Company. FORM, EXCHANGE, AND TRANSFER Unless otherwise specified in the applicable Prospectus Supplement, Senior Debentures of each series will be issuable only in fully registered form without coupons and in denominations of $1,000 and any integral multiple thereof. (Sections 201 and 302) At the option of the Holder, subject to the terms of the Senior Unsecured Indenture and the limitations applicable to global securities, Senior Debentures of any series will be exchangeable for other Senior Debentures of the same series, of any authorized denomination and of like tenor and aggregate principal amount. (Section 305) Subject to the terms of the Senior Unsecured Indenture and the limitations applicable to global securities, Senior Debentures may be presented for exchange as provided above for registration of transfer (duly endorsed or accompanied by a duly executed instrument of transfer) at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. Unless otherwise indicated, no service charge will be made for any registration of transfer or exchange of Senior Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Every Senior Debenture presented or surrendered for registration of transfer or exchange shall (if so required by the Company, the Senior Unsecured Indenture Trustee or the Security Registrar) be duly endorsed or accompanied by an executed written instrument of transfer in form satisfactory to the Company, the Senior Unsecured Indenture Trustee or the Security Registrar. (Section 305) Any transfer agent (in addition to the Security Registrar) initially designated by the Company for any Senior Debenture will be named in the applicable Prospectus Supplement. The Company may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for the Senior Debentures of each series. The Company may perform all functions of any office or agency. (Section 602) The Company shall not be required to execute or register the transfer of or the exchange of any Senior Debenture, or any Tranche thereof, during a period of 15 days preceding the notice to be given identifying the Senior Debenture called for redemption, or any Senior Debentures so selected for redemption, in whole or in part, except the unredeemed portion of any such Senior Debenture being redeemed in part. (Section 305) 28 32 PAYMENT AND PAYING AGENT Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest on a Senior Debenture on any Interest Payment Date will be made to the person in whose name such Senior Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in the applicable Prospectus Supplement, principal of and any interest on the Senior Debentures of a particular series will be payable at the office of such Paying Agent or Paying Agents as the Company may designate for such purpose from time to time. Unless otherwise indicated in the applicable Prospectus Supplement, the corporate trust office of the Senior Unsecured Indenture Trustee in New York, New York will be designated as the Company's sole Paying Agent for payment with respect to Senior Debentures of each series. Any other Paying Agents initially designated by the Company for the Senior Debentures of a particular series will be named in the applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company will be required to maintain a Paying Agent in each Place of Payment for the Senior Debentures of a particular series. (Section 602) Any moneys deposited by the Company with the Trustee or any Paying Agent for the payment of the principal of or any premium or interest on any Senior Debenture which remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be paid to the Company, and the Holder of such Senior Debenture, as an unsecured general creditor and not as a Holder, thereafter may look only to the Company for payment thereof. (Section 603) REDEMPTION Any terms for the optional or mandatory redemption of Senior Debentures will be set forth in the applicable Prospectus Supplement or a supplement thereto. Except as shall otherwise be provided in the applicable Prospectus Supplement with respect to Senior Debentures that are redeemable at the option of the Holder, Senior Debentures will be redeemable only upon notice by mail not less than 30 days nor more than 60 days prior to the date fixed for redemption, and, if less than all the Senior Debentures of a series, or any Tranche thereof, are to be redeemed, the particular Senior Debentures to be redeemed will be selected by the Securities Registrar by such method as shall be provided for any particular series, or in the absence of any such provision, by such method of random selection as the Security Registrar deems fair and appropriate. (Sections 403 and 404) Any notice of redemption at the option of the Company may state that such redemption will be conditional upon receipt by the Paying Agent or Agents, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Senior Debentures and that if such money has not been so received, such notice will be of no force and effect and the Company will not be required to redeem such Senior Debentures. (Section 404) CONSOLIDATION, MERGER, CONVEYANCE, OR OTHER TRANSFER Under the terms of the Senior Unsecured Indenture, the Company may not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless (i) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and existing under the laws of any domestic jurisdiction and shall expressly assume the Company's obligations on the Senior Debentures and under the Senior Unsecured Indenture, (ii) immediately after giving effect to the transaction, no Event of Default shall have occurred and be continuing, and (iii) the Company will have delivered to the Senior Unsecured Indenture Trustee an Officer's Certificate and an Opinion of Counsel as provided in the Senior Unsecured Indenture. (Section 1101) LIMITATIONS ON LIENS 29 33 So long as there remains outstanding any Senior Debentures of any series to which Section 6.08 of the Senior Unsecured Indenture applies under the terms of such series, the Company may not, and may not permit any subsidiary to, create or suffer to be created or to exist any mortgage, pledge, security interest, encumbrance, easement, lease, reservation, restriction, servitude, charge or similar right or lien of any kind (for purposes of this paragraph, "Liens") on any of its properties or assets now owned or hereinafter acquired to secure any indebtedness, without making effective provision whereby the Senior Debentures (together with, if the Company shall so determine, any other debt of the Company or any subsidiary then existing or thereafter created that is not subordinate to such Senior Debentures) of such series shall be equally and ratably secured with (or prior to) any and all such indebtedness and with any other indebtedness similarly entitled to be equally and ratably secured. The foregoing restriction shall not apply to or prevent the creation or existence of the following: (a) the Liens of the 1940 Indenture, the 1923 Indenture and the Mortgage or any indenture supplemental to any thereof subjecting any property to the Lien thereof or confirming the Lien thereof upon any property, whether now owned or hereafter acquired; (b) Liens on property existing at the time of acquisition or construction of such property (or created within one year after completion of such acquisition or construction), whether by purchase, merger, construction or otherwise (or on the property of a subsidiary at the date it became a subsidiary), or to secure the payment of all or any part of the purchase price or construction cost thereof, including the extension of any such Liens to repairs, renewals, replacements, substitutions, betterments, additions, extensions and improvements then or thereafter made on the property subject thereto; (c) any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part of Liens permitted by the foregoing clauses (a) and (b); (d) the pledge of any bonds or other securities at any time issued under any of the Liens permitted by clauses (a), (b), or (c); or (e) Permitted Liens. Further, this restriction shall not apply to or prevent the creation or existence of leases made, or existing on property acquired, in the ordinary course of business. "Permitted Liens" means any of the following: (a) Liens for taxes, assessments and other governmental charges or requirements not delinquent or which can thereafter be paid without penalty or which are currently being contested in good faith by appropriate proceedings; (b) mechanics', workmen's, repairmen's, materialmen's, warehousemen's and carriers' Liens, Liens or privileges of any employees of the Company for salary or wages earned, but not yet payable, and other Liens, including without limitation Liens for worker's compensation awards, arising in the ordinary course of business for charges or requirements which are not delinquent or which are being contested in good faith and by appropriate proceedings; (c) Liens in respect of judgments or awards with respect to which the Company shall (i) in good faith be prosecuting an appeal or other proceeding for review and with respect to which the Company shall have secured a stay of execution pending such appeal or other proceeding or (ii) have the right to prosecute an appeal or other proceeding for review; (d) easements, leases, reservations or other rights of others in, on and/or over, and laws, regulations and restrictions affecting, and defects and irregularities in record title to, the property of the Company or any part thereof; provided, however, that such easements, leases, reservations, rights, laws, regulations, restrictions, defects and irregularities do not, in the reasonable judgment of the Company, in the aggregate materially impair the use by the Company of its property considered as a whole for the purposes for which it is held by the Company; (e) any defects or irregularities in title to any rights-of-way and/or to any real estate used or to be used primarily for right-of-way purposes or held under lease, easement, license or similar right; provided, however, that (i) the Company shall have obtained from the apparent owner of the lands or estates therein covered by any such right-of-way a sufficient right, by the terms of the instrument granting such right-of-way, lease, easement, license or similar right, to the use thereof for the purpose for which the Company acquired the same, (ii) the Company has power under eminent domain, or similar statutes, to remove such defects or irregularities or (iii) such defects or irregularities may be otherwise remedied without undue effort or expense; (f) Liens securing indebtedness neither created, assumed nor guaranteed by the Company nor on account of which it customarily pays interest, existing at the date of the execution and delivery of this Indenture, or, as to property hereafter acquired, at the time of the acquisition thereof by the Company, upon real estate or rights in or relating to real estate acquired by the Company for rights of way for distribution and transmission lines and for pipes, substations, structures and appurtenances thereto; (g) leases existing at the date of the execution and delivery of this Indenture affecting property owned by the Company at said date and renewals and extensions thereof and leases for a term of not more than ten (10) years (including extensions or renewals at the option of the tenant) affecting property acquired by the Company after said date; (h) any controls, restrictions, obligations, duties and/or other burdens imposed by any federal, state, municipal or other law, or by any rule, regulation or order of any Governmental Authority, upon any property of the Company or the operation or use thereof or upon the Company with respect to any of its property or the operation or use thereof or with respect to any franchise, grant, license, permit or public purpose requirement, or any rights reserved to or otherwise vested in any Governmental Authority to impose any such controls, restrictions, obligations, duties and/or other burdens; (i) Liens granted on air or water pollution control or sewage or solid waste disposal facilities of the Company in connection with the issuance of industrial development revenue bonds; (j) any right which any Governmental Authority may have by virtue of any 30 34 franchise, license, contract or statute to purchase, or designate a purchaser of or order the sale of, any property of the Company upon payment of cash or reasonable compensation therefor or to terminate any franchise, license or other rights or to regulate the property and business of the Company; (k) any Liens which have been bonded for the full amount in dispute or for the payment of which other adequate security arrangements have been made or which, in the opinion of counsel, are not material; (l) Prepaid Liens; (m) Liens resulting from good faith deposits made in connection with bids, tenders, contracts or leases to which the Company is a party and Liens resulting from deposits made to secure public or statutory obligations of the Company or for the purpose of obtaining a stay or discharge in the course of any legal proceedings; (n) the pledge or assignment in the ordinary course of business of electricity, gas (either natural or artificial) or steam, accounts receivable or customers' installment paper; (o) rights reserved to or vested in others to take or receive any part of the electricity, gas (either natural or artificial), steam or any by-products thereof generated or produced by or from any properties of the Company or with respect to any other rights concerning electricity, gas (either natural or artificial) or steam supply, transportation, or storage which are in use in the ordinary course of the electricity, gas (either natural or artificial) or steam business; (p) any landlord's Lien; (q) Liens incurred pursuant to Section 907; and (r) Liens or encumbrances not otherwise permitted if, at the time of incurrence and after giving effect thereto, the aggregate of all obligations of the Company and its subsidiaries secured thereby does not exceed 10% of Tangible Net Worth. "Prepaid Lien" means any Lien securing indebtedness for the payment of which money in the necessary amount shall have been irrevocably deposited in trust with the trustee or other holder of such Lien; provided, however, that if such indebtedness is to be redeemed or otherwise prepaid prior to the stated maturity thereof, any notice requisite to such redemption or prepayment shall have been given in accordance with the mortgage or other instrument creating such Lien or irrevocable instructions to give such notice shall have been given to such trustee or other holder. "Tangible Net Worth" means (i) common stockholders' equity appearing on the most recent balance sheet of the Company (or consolidated balance sheet of the Company and its subsidiaries if the Company then has one or more subsidiaries the accounts of which are consolidated with the accounts of the Company) prepared in accordance with generally accepted accounting principles less (ii) intangible assets (excluding intangible assets recoverable through rates as prescribed by applicable regulatory authorities). EVENTS OF DEFAULT Each of the following will constitute an Event of Default under the Senior Unsecured Indenture with respect to Senior Debentures of any series: (a) failure to pay any interest on any Senior Debentures of such series within 60 days after the same becomes due and payable; provided, that an extension of an interest payment period by the Company permitted by the terms of the series shall not constitute a failure to pay interest for this purpose; (b) failure to pay principal of or premium, if any, on any Senior Debenture of such series within three business days after the same becomes due and payable; (c) failure to perform or breach of any other covenant or warranty of the Company in the Senior Unsecured Indenture (other than a covenant or warranty of the Company in the Senior Unsecured Indenture solely for the benefit of one or more series of Senior Debentures other than such series) for 60 days after written notice to the Company by the Senior Unsecured Indenture Trustee, or to the Company and the Senior Unsecured Indenture Trustee by the Holders of at least 33% in principal amount of the Senior Debentures of such series Outstanding under the Senior Unsecured Indenture as provided in the Senior Unsecured Indenture; (d) certain events of bankruptcy, insolvency or reorganization; and (e) any other Event of Default specified in the applicable Prospectus Supplement with respect to Senior Debentures of a particular series. (Section 801) An Event of Default with respect to the Senior Debentures may not necessarily constitute an Event of Default with respect to the Senior Debentures of any other series issued under the Senior Unsecured Indenture. If an Event of Default with respect to any series of Senior Debentures occurs and is continuing, then either the Senior Unsecured Indenture Trustee or the Holders of not less than 33% in principal amount of the Outstanding Senior Debentures of such series may declare the principal amount (or if the Senior Debentures of such series are Discount Securities, such portion of the principal amount hereof as may be specified in the applicable Prospectus Supplement) of all of the Senior Debentures of such series to be due and payable immediately; provided, however, that if an Event of Default occurs and is continuing with respect to more than one series of Senior Debentures, the Senior Unsecured Indenture Trustee or the Holders of not less than 33% in aggregate principal amount of the Outstanding Securities of all such series, considered as one class, may make such declaration of acceleration and not the Holders of the Senior Debentures of any one of such series. Subject to the provisions of the Senior Unsecured Indenture relating to the duties of the Senior Unsecured Indenture Trustee in case an Event of Default shall occur and be continuing, the Senior Unsecured Indenture Trustee 31 35 will be under no obligation to exercise any of its rights or powers under the Senior Unsecured Indenture at the request or direction of any Holder, unless such Holder shall have offered to the Senior Unsecured Indenture Trustee reasonable security or indemnity. (Section 903) Subject to such provisions of the indemnification of the Senior Unsecured Indenture Trustee, the Holders of a majority in principal amount of the Outstanding Senior Debentures of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Senior Unsecured Indenture Trustee, or exercising any trust or power conferred on the Senior Unsecured Indenture Trustee, with respect to the Senior Debentures of that series. (Section 812) No Holder of a Senior Debenture of any series will have any right to institute any proceeding with respect to the Senior Unsecured Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Senior Debentures of such series, (ii) the Holders of not less than a majority in aggregate principal amount of the Outstanding Senior Debentures of such series have made written request to the Senior Unsecured Indenture Trustee, and such Holder or Holders have offered reasonable indemnity to the Senior Unsecured Indenture Trustee, to institute such proceeding as trustee and (iii) the Senior Unsecured Indenture Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Outstanding Senior Debentures of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 807) However, such limitations do not apply to a suit instituted by a Holder of a Senior Debenture for the enforcement of payment of the principal of or any premium or interest on such Senior Debenture on or after the applicable due date specified in such Senior Debenture. (Section 808) The Company will be required to furnish to the Senior Unsecured Indenture Trustee annually, not later than October 1 in each year, a statement by an appropriate officer as to such officer's knowledge of the Company's compliance with all conditions and covenants under the Senior Unsecured Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under the Senior Unsecured Indenture. (Section 606) RIGHT TO CURE At any time after the declaration of acceleration with respect to the Senior Debentures of any series has been made and before a judgment or decree for payment of the money due has been obtained, the Event or Events of Default giving rise to such declaration of acceleration will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if (a) the Company has paid or deposited with the Senior Unsecured Indenture Trustee a sum sufficient to pay (1) all overdue interest on all Senior Debentures of such series; (2) the principal of and premium, if any, on any Senior Debentures of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Senior Debentures; (3) interest upon overdue interest at the rate or rates prescribed therefor in such Senior Debentures, to the extent that payment of such interest is lawful; and (4) all amounts due to the Senior Unsecured Indenture Trustee under the Senior Unsecured Indenture; and (b) any other Event or Events of Default with respect to the Senior Debentures of such series, other than the non-payment of the principal of the Senior Debentures of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the Senior Unsecured Indenture. (Section 802) MODIFICATION AND WAIVER Without the consent of any Holder of Senior Debentures, the Company and the Senior Unsecured Indenture Trustee may enter into one or more supplemental indentures to the Senior Unsecured Indenture for any of the 32 36 following purposes: (a) to evidence the assumption by any permitted successor to the Company of the covenants of the Company in the Senior Unsecured Indenture and the Senior Debentures; or (b) to add one or more covenants of the Company or other provisions for the benefit of the Holders of all or any series of Outstanding Senior Debentures or to surrender any right or power conferred upon the Company by the Senior Unsecured Indenture; or (c) to add any additional Events of Default with respect to all or any series of Outstanding Senior Debentures; or (d) to change or eliminate any provision of the Senior Unsecured Indenture or to add any new provision to the Senior Unsecured Indenture, provided that if such change, elimination or addition will adversely affect the interests of the Holders of Senior Debentures of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when the consent of the Holders of such series so affected has been obtained or when there is no Senior Debenture of such series remaining Outstanding under the Senior Unsecured Indenture; or (e) to provide collateral security for the Senior Debentures; or (f) to establish the form or terms of Senior Debentures of any series as permitted by the Senior Unsecured Indenture; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for giving of notice to, and the solicitation of the vote or consent of, the Holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment of a separate or successor Senior Unsecured Indenture Trustee under the Senior Unsecured Indenture with respect to the Senior Debentures of one or more series and to add or to change any of the provisions of the Senior Unsecured Indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the Senior Unsecured Indenture by more than one trustee; or (i) to provide for the procedures required to permit the utilization of a noncertificated system of registration for any series of Senior Debentures; or (j) to change any place where (1) the principal of and premium, if any, and interest, if any, on any Senior Debentures shall be payable, (2) any Senior Debentures may be surrendered for registration of transfer or exchange and (3) notices and demands to or upon the Company in respect of Senior Debentures and the Senior Unsecured Indenture may be served; or (k) to cure any ambiguity, to correct or supplement any defective or inconsistent provision or to make or change any other provisions with respect to matters and questions arising under the Senior Unsecured Indenture, provided such changes or additions shall not adversely affect the interests of the Holders of Senior Debentures of any series in any material respect. (Section 1201) The Holders of not less than a majority in aggregate principal amount of the Outstanding Senior Debentures of any series may waive compliance by the Company with certain restrictive provisions of the Senior Unsecured Indenture. (Section 607) The Holders of not less than a majority in principal amount of the Outstanding Senior Debentures of any series may waive any past default under the Senior Unsecured Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Senior Unsecured Indenture that cannot be modified or be amended without the consent of the Holder of each Outstanding Senior Debenture of such series affected. (Section 813) Without limiting the generality of the foregoing, if the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date of the Senior Unsecured Indenture in such a way as to require changes to the Senior Unsecured Indenture or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the Senior Unsecured Indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the Senior Unsecured Indenture, the Senior Unsecured Indenture will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimination, and the Company and the Senior Unsecured Indenture Trustee may, without the consent of any Holders, enter into one or more supplemental indentures to evidence or effect such amendment. (Section 1201) Except as provided above, the consent of the Holders of not less than a majority in aggregate principal amount of the Senior Debentures of all series then Outstanding, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the Senior Unsecured Indenture pursuant to one or more supplemental indentures; provided, however, that if less than all of the series of Senior Debentures Outstanding are directly affected by a proposed supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of Outstanding Senior Debentures of all series so directly affected, considered as one class, will be required; and provided, further, that if the Senior Debentures of any series have been issued in more than one Tranche and if the proposed supplemental indenture directly affects the rights of the Holders of one or more, but less than all, such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Senior Debentures of all Tranches so directly affected, considered as one class, will be required; and provided further, that no such supplemental indenture may (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Senior Debenture, or 33 37 reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of any Discount Security that would be due and payable upon a declaration of acceleration of Maturity or change the coin or currency (or other property) in which any Senior Debenture or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity of any Senior Debenture (or, in the case of redemption, on or after the redemption date) without, in any such case, the consent of the Holder of such Senior Debenture, (b) reduce the percentage in principal amount of the Outstanding Senior Debentures of any series, or any Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of the Senior Unsecured Indenture or any default thereunder and its consequences, or reduce the requirements for quorum or voting, without, in any such case, the consent of the Holder of each Outstanding Senior Debenture of such series or Tranche, or (c) modify certain of the provisions of the Senior Unsecured Indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults with respect to the Senior Debentures of any series, or any Tranche thereof, without the consent of the Holder of each Outstanding Senior Debenture affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of the Senior Unsecured Indenture which has expressly been included solely for the benefit of one or more particular series of Senior Debentures or one or more Tranches thereof, or modifies the rights of the Holders of Senior Debentures of such series or Tranches with respect to such covenant or other provision, will be deemed not to affect the rights under the Indenture of the Holders of the Senior Debentures of any other series or Tranche. (Section 1202) The Senior Unsecured Indenture provides that in determining whether the Holders of the requisite principal amount of the Outstanding Senior Debentures have given any request, demand, authorization, direction, notice, consent, or waiver under the Senior Unsecured Indenture as of any date, or whether or not a quorum is present at a meeting of Holders, (i) Senior Debentures owned by the Company or any other obligor upon the Senior Debentures or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all Securities Outstanding under this Senior Unsecured Indenture, or all Outstanding Senior Debentures of each such series and each such Tranche, as the case may be, determined without regard to this clause (i)) shall be disregarded and deemed not to be Outstanding; (ii) the principal amount of a Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof as provided in the Senior Unsecured Indenture; and (iii) the principal amount of a Senior Debenture denominated in one or more foreign currencies or a composite currency that will be deemed to be Outstanding will be the Dollar equivalent, determined as of such date in the manner prescribed for such Senior Debenture, of the principal amount of such Senior Debenture (or, in the case of a Senior Debenture described in clause (ii) above, of the amount described in such clause). (Section 101) If the Company shall solicit from Holders any request, demand, authorization, direction, notice, consent, election, waiver or other Act, the Company may, at its option, by Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, election, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, election, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the Outstanding Senior Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, direction, waiver or other Act, and for that purpose the Outstanding Senior Debentures shall be computed as of the record date. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Senior Debenture and the Holder of every Senior Debenture issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Senior Debenture. (Section 104) DEFEASANCE Unless otherwise indicated in the applicable Prospectus Supplement, any Senior Debenture, or any portion of the principal amount thereof, will be deemed to have been paid for purposes of the Senior Unsecured Indenture, and, at the Company's election, the entire indebtedness of the Company in respect thereof will be deemed to have 34 38 been satisfied and discharged, if there has been irrevocably deposited with the Senior Unsecured Indenture Trustee or any Paying Agent (other than the Company), in trust: (a) money in an amount which will be sufficient, or (b) Eligible Obligations (as described below), which do not contain provisions permitting the redemption or other prepaying thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide monies which, together with money, if any, deposited with or held by the Senior Unsecured Indenture Trustee or such Paying Agent, will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Senior Debentures or portions thereof. (Section 701) For this purpose, unless otherwise indicated in the applicable Prospectus Supplement, Eligible Obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States, entitled to the benefit of the full faith and credit thereof, and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof. (Section 101) While the Company knows of no legal precedent on point, it is possible that, for federal income tax purposes, any deposit contemplated in the preceding paragraph could be treated as a taxable exchange of the related securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, Holders of such securities would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their securities. In addition, such Holders thereafter would be required to recognize for federal income tax purposes a share of the income, gain or loss of the trust. The amount so required to be recognized could be different from the amount that would be recognized in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of any such deposit. RESIGNATION OF SENIOR UNSECURED INDENTURE TRUSTEE The Senior Unsecured Indenture Trustee may resign at any time by giving written notice thereof to the Company or may be removed at any time by Act of the Holders of a majority in principal amount of Senior Debentures then Outstanding delivered to the Senior Unsecured Indenture Trustee and the Company. No resignation or removal of the Senior Unsecured Indenture Trustee and no appointment of a successor trustee will become effective until the acceptance of appointment by a successor trustee in accordance with the requirements of the Senior Unsecured Indenture. So long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing and except with respect to a Senior Unsecured Indenture Trustee appointed by Act of the Holders of a majority in principal amount of the Outstanding Senior Debentures, if the Company has delivered to the Trustee a resolution of its Board of Directors appointing a successor trustee and such successor has accepted such appointment in accordance with the terms of the Senior Unsecured Indenture, the Senior Unsecured Indenture Trustee will be deemed to have resigned and the successor will be deemed to have been appointed as trustee in accordance with the Senior Unsecured Indenture. (Section 910) NOTICES Notices to Holders of Senior Debentures will be given by mail to the addresses of such Holders as they may appear in the Security Register. (Section 106) TITLE The Company, the Senior Unsecured Indenture Trustee, and any agent of the Company or the Senior Unsecured Indenture Trustee may treat the Person in whose name a Senior Debenture is registered as the absolute owner thereof (whether or not such Senior Debenture may be overdue) for the purpose of making payment and for all other purposes. (Section 308) GOVERNING LAW The Senior Unsecured Indenture and the Senior Debentures will be governed by, construed in accordance with, the laws of the State of New York, except to the extent the law of any other jurisdiction shall be mandatorily applicable. (Section 112) 35 39 LIMITATION ON SUITS The Senior Unsecured Indenture limits a Holder's right to institute any proceeding with respect to the Senior Unsecured Indenture, the appointment of a receiver or trustee, or for any other remedy under the Senior Unsecured Indenture. (Section 807) MAINTENANCE OF PROPERTIES The Senior Unsecured Indenture provides that the Company shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith may be properly conducted; provided, however, that nothing shall prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. (Section 605) RELATIONSHIP WITH THE SENIOR UNSECURED INDENTURE TRUSTEE See "DESCRIPTION OF THE COLLATERAL TRUST BONDS -- Relationship with the Trustee" for a description of certain relationships between the Senior Unsecured Indenture Trustee and the Company. DESCRIPTION OF THE SUBORDINATED INDENTURE GENERAL The Securities may be issued in one or more series under the Indenture (For Unsecured Subordinated Debt Securities) (the "Subordinated Indenture") between the Company and The First National Bank of Chicago, as trustee (the "Subordinated Indenture Trustee"). The summaries of the Subordinated Indenture set forth below do not purport to be complete and are subject to the detailed provisions of the Subordinated Indenture, a copy of which was previously filed with the Commission, is listed as an exhibit to the Registration Statement of which this Prospectus is a part, and is incorporated herein by reference. Capitalized terms used in this section which are not otherwise defined in this Prospectus shall have the meanings ascribed to them in the Subordinated Indenture. Wherever particular provisions or terms defined in the Subordinated Indenture are referred to in this section, such provisions or definitions are incorporated by reference as part of the statements made in this section, and such statements are qualified in their entirety by such reference. References to article and section numbers herein, unless otherwise indicated, are references to article and section numbers of the Subordinated Indenture. The Securities issued under the Subordinated Indenture (the "Subordinated Debentures") will be unsecured, subordinated obligations of the Company and shall not be afforded any protection under the Mortgage, pursuant to which various series of Collateral Trust Bonds may be issued. Reference is made to the Prospectus Supplement, or a supplement thereto, for a description of the following terms of the series of Subordinated Debentures in respect of which this Prospectus is being delivered: (1) the title of such series of Subordinated Debentures; (2) any limit on the aggregate principal amount of such Subordinated Debentures or the series of which they are a part; (3) the Person or Persons to whom interest on the Subordinated Debentures of such series shall be payable if other than the Persons in whose names such Subordinated Debentures are registered; (4) the date or dates on which the principal of any of such Subordinated Debentures will be payable; (5) the rate or rates (which may be fixed or variable) and/or the method of determination of such rate or rates at which any of such Subordinated Debentures will bear interest, if any, the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable and the Regular Record Date for any such interest payable on any Interest Payment Date; (6) the place or places where (i) the principal of, premium, if any, and interest on any of such Subordinated Debentures will be payable, (ii) registration of transfer of such Subordinated Debentures may be effected, (iii) exchanges of such Subordinated Debentures may be effected and (iv) notices and demands to or upon the Company in respect of such Subordinated Debentures may be served; the Security Registrar for such Subordinated Debentures and, if such is the 36 40 case, that the principal of such Subordinated Debentures shall be payable without presentment or surrender thereof; (7) the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which any of such Subordinated Debentures may be redeemed, in whole or in part, at the option of the Company; (8) the obligation or obligations, if any, of the Company to redeem or purchase any of such Subordinated Debentures pursuant to any sinking fund or other mandatory redemption provisions or at the option of the Holder thereof, and the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which any of such Subordinated Debentures shall be redeemed or purchased, in whole or in part, pursuant to such obligation, and applicable exceptions to the requirements of a notice of redemption in the case of mandatory redemption or redemption at the option of the Holder; (9) the denominations in which any of such Subordinated Debentures will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (10) if other than the currency of the United States, the currency or currencies, including composite currencies, in which payment of the principal of and any premium and interest on any of such Subordinated Debentures will be payable; (11) if the principal of or any premium or interest on any of such Subordinated Debentures is to be payable, at the election of the Company or the Holder thereof, in a coin or currency other than in which such Subordinated Debentures are stated to be payable, the period or periods within which and the terms and conditions upon which, such election is to be made; (12) if the principal of or premium, if any, or interest on such Subordinated Debentures are to be payable, or are to be payable at the election of the Company or a Holder thereof, in securities or other property, the type and amount of such securities or other property, or the formulary or other method or other means by which such amount shall be determined, and the period or periods within which, and the terms and conditions upon which, any such election may be made; (13) if the amount payable in respect of principal of or any premium or interest on any of such Subordinated Debentures may be determined with reference to an index or other fact or event ascertainable outside the Subordinated Indenture, the manner in which such amounts will be determined; (14) if other than the principal amount thereof, the portion of the principal amount of any of such Subordinated Debentures which shall be payable upon declaration of acceleration of the Maturity thereof; (15) any addition to the Events of Default applicable to any of such Subordinated Debentures and any addition to the covenants of the Company for the benefit of the Holders of such Subordinated Debentures; (16) the terms, if any, pursuant to which such Subordinated Debentures may be converted into or exchanged for shares of capital stock or other securities of the Company or any other Person; (17) the obligations or instruments, if any, which shall be considered to be Eligible Obligations in respect of such Subordinated Debentures denominated in a currency other than Dollars or in a composite currency, and any additional or alternative provisions for the reinstatement of the Company's indebtedness in respect of such Subordinated Debentures after the satisfaction and discharge thereof; (18) if such Subordinated Debentures are to be issued in global form, (i) any limitations on the rights of the Holder or Holders of such Subordinated Debentures to transfer or exchange the same or to obtain the registration of transfer thereof, (ii) any limitations on the rights of the Holder or Holders thereof to obtain certificates therefor in definitive form in lieu of temporary form and (iii) any and all other matters incidental to such Subordinated Debentures; (19) if such Subordinated Debentures are to be issuable as bearer securities; (20) any limitations on the rights of the Holders of such Subordinated Debentures to transfer or exchange such Subordinated Debentures or to obtain the registration of transfer thereof, and if a service charge will be made for the registration of transfer or exchange of such Subordinated Debentures, the amount or terms thereof; (21) any exceptions to the provisions governing payments due on legal holidays or any variations in the definition of Business Day with respect to such Subordinated Debentures; and (22) any other terms of such Subordinated Debentures of such series, or any Tranche thereof, not inconsistent with the provisions of the Subordinated Indenture. (Section 301) Subordinated Debentures may be sold at a substantial discount below their principal amount. Certain special United States federal income tax considerations applicable to Subordinated Debentures sold at an original issue discount may be described in the applicable Prospectus Supplement. In addition, certain special United States federal income tax or other considerations applicable to any Subordinated Debentures which are denominated in a currency or currency unit other than Dollars may be described in the applicable Prospectus Supplement. Except as may otherwise be described in the Prospectus Supplement, the covenants contained in the Subordinated Indenture would not afford Holders of Subordinated Debentures protection in the event of a highly-leveraged transaction or change of control involving the Company. SUBORDINATION The Subordinated Indenture provides that payment of the principal of, premium, if any, and interest on Subordinated Debentures is subordinated and subject in right of payment to the prior payment in full of all Senior 37 41 Indebtedness (as defined below) of the Company, all as provided in the Subordinated Indenture. No payment of principal of (including redemption of and sinking fund payments), premium, if any, or interest on, Subordinated Debentures may be made if payment of principal, premium, interest or any other payment on any Senior Indebtedness is not made when due, any applicable grace period with respect to such default has ended and such default has not been cured or waived or ceased to exist, or if the maturity on any Senior Indebtedness has been accelerated because of default. Upon any distribution of assets of the Company to creditors upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal of, premium, if any, and interest due or to become due on, all Senior Indebtedness must be paid in full before any payment on the Subordinated Debentures. Subject to the payment in full of all Senior Indebtedness, the rights of the holders of Subordinated Debentures will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on Subordinated Debentures are paid in full. (Sections 1501 - 1504) The term "Senior Indebtedness" means all obligations (other than non-recourse obligations and the indebtedness issued under the Subordinated Indenture) of, or guaranteed or assumed by, the Company for borrowed money, including both senior and subordinated indebtedness for borrowed money (other than the Subordinated Debentures), or for the payment of money relating to any lease which is capitalized on the consolidated balance sheet of the Company and its subsidiaries in accordance with generally accepted accounting principles, or evidenced by bonds, debentures, notes or other similar instruments, and in each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date of the Subordinated Indenture or subsequently incurred by the Company. (Section 101) Such Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any terms of such Senior Indebtedness. (Section 1509) The Subordinated Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued. As of March 31, 1997, Senior Indebtedness of the Company aggregated approximately $708 million. FORM, EXCHANGE, AND TRANSFER Unless otherwise specified in the applicable Prospectus Supplement, Subordinated Debentures of each series will be issuable only in fully registered form without coupons and in denominations of $1,000 and any integral multiple thereof. (Sections 201 and 302) At the option of the Holder, subject to the terms of the Subordinated Indenture and the limitations applicable to global securities, Subordinated Debentures of any series will be exchangeable for other Subordinated Debentures of the same series, of any authorized denomination and of like tenor and aggregate principal amount. (Section 305) Subject to the terms of the Subordinated Indenture and the limitations applicable to global securities, Subordinated Debentures may be presented for exchange as provided above for registration of transfer (duly endorsed or accompanied by a duly executed instrument of transfer) at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. Unless otherwise indicated, no service charge will be made for any registration of transfer or exchange of Subordinated Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Every Subordinated Debenture presented or surrendered for registration of transfer or exchange shall (if so required by the Company, the Subordinated Indenture Trustee or the Security Registrar) be duly endorsed or accompanied by an executed written instrument of transfer in form satisfactory to the Company, the Subordinated Indenture Trustee or the Security Registrar. (Section 305) Any transfer agent (in addition to the Security Registrar) initially designated by the Company for any Subordinated Debenture will be named in the applicable Prospectus Supplement. The Company may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for the Subordinated Debentures of each series. The Company may perform all functions of any office or agency. (Section 602) The Company shall not be required to execute or register the transfer of or the exchange of any Subordinated Debenture, or any Tranche thereof, during a period of 15 days preceding the notice to be given identifying the Subordinated Debenture called for redemption, or any Subordinated Debentures so selected for 38 42 redemption, in whole or in part, except the unredeemed portion of any such Subordinated Debenture being redeemed in part. (Section 305) PAYMENT AND PAYING AGENT Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest on a Subordinated Debenture on any Interest Payment Date will be made to the person in whose name such Subordinated Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in the applicable Prospectus Supplement, principal of and any interest on the Subordinated Debentures of a particular series will be payable at the office of such Paying Agent or Paying Agents as the Company may designate for such purpose from time to time. Unless otherwise indicated in the applicable Prospectus Supplement, the corporate trust office of the Subordinated Indenture Trustee in New York, New York will be designated as the Company's sole Paying Agent for payment with respect to Subordinated Debentures of each series. Any other Paying Agents initially designated by the Company for the Subordinated Debentures of a particular series will be named in the applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company will be required to maintain a Paying Agent in each Place of Payment for the Subordinated Debentures of a particular series. (Section 602) Any moneys deposited by the Company with the Trustee or any Paying Agent for the payment of the principal of or any premium or interest on any Subordinated Debenture which remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be paid to the Company, and the Holder of such Subordinated Debenture, as an unsecured general creditor and not as a Holder, thereafter may look only to the Company for payment thereof. (Section 603) REDEMPTION Any terms for the optional or mandatory redemption of Subordinated Debentures will be set forth in the applicable Prospectus Supplement or a supplement thereto. Except as shall otherwise be provided in the applicable Prospectus Supplement with respect to Subordinated Debentures that are redeemable at the option of the Holder, Subordinated Debentures will be redeemable only upon notice by mail not less than 30 days nor more than 60 days prior to the date fixed for redemption, and, if less than all the Subordinated Debentures of a series, or any Tranche thereof, are to be redeemed, the particular Subordinated Debentures to be redeemed will be selected by the Securities Registrar by such method as shall be provided for any particular series, or in the absence of any such provision, by such method of random selection as the Security Registrar deems fair and appropriate. (Sections 403 and 404) Any notice of redemption at the option of the Company may state that such redemption will be conditional upon receipt by the Paying Agent or Agents, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Subordinated Debentures and that if such money has not been so received, such notice will be of no force and effect and the Company will not be required to redeem such Subordinated Debentures. (Section 404) CONSOLIDATION, MERGER, CONVEYANCE, OR OTHER TRANSFER Under the terms of the Subordinated Indenture, the Company may not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless (i) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and existing under the laws of any domestic jurisdiction and shall expressly assume the Company's obligations on the Subordinated Debentures and under the Subordinated Indenture, (ii) immediately after giving effect to the transaction, no Event of Default shall have occurred and be continuing, and (iii) the Company will have delivered to the Subordinated Indenture Trustee an Officer's Certificate and an Opinion of Counsel as provided in the Subordinated Indenture. (Section 1101) 39 43 EVENTS OF DEFAULT Each of the following will constitute an Event of Default under the Subordinated Indenture with respect to Subordinated Debentures of any series: (a) failure to pay any interest on any Subordinated Debentures of such series within 60 days after the same becomes due and payable; provided, that an extension of an interest payment period by the Company permitted by the terms of the series shall not constitute a failure to pay interest for this purpose; (b) failure to pay principal of or premium, if any, on any Subordinated Debenture of such series within three business days after the same becomes due and payable; (c) failure to perform or breach of any other covenant or warranty of the Company in the Subordinated Indenture (other than a covenant or warranty of the Company in the Subordinated Indenture solely for the benefit of one or more series of Subordinated Debentures other than such series) for 60 days after written notice to the Company by the Subordinated Indenture Trustee, or to the Company and the Subordinated Indenture Trustee by the Holders of at least 33% in principal amount of the Subordinated Debentures of such series Outstanding under the Subordinated Indenture as provided in the Subordinated Indenture; (d) certain events of bankruptcy, insolvency or reorganization; and (e) any other Event of Default specified in the applicable Prospectus Supplement with respect to Subordinated Debentures of a particular series. (Section 801) An Event of Default with respect to the Subordinated Debentures may not necessarily constitute an Event of Default with respect to the Subordinated Debentures of any other series issued under the Subordinated Indenture. If an Event of Default with respect to any series of Subordinated Debentures occurs and is continuing, then either the Subordinated Indenture Trustee or the Holders of not less than 33% in principal amount of the Outstanding Subordinated Debentures of such series may declare the principal amount (or if the Subordinated Debentures of such series are Discount Securities, such portion of the principal amount hereof as may be specified in the applicable Prospectus Supplement) of all of the Subordinated Debentures of such series to be due and payable immediately; provided, however, that if an Event of Default occurs and is continuing with respect to more than one series of Subordinated Debentures, the Subordinated Indenture Trustee or the Holders of not less than 33% in aggregate principal amount of the Outstanding Securities of all such series, considered as one class, may make such declaration of acceleration and not the Holders of the Subordinated Debentures of any one of such series. Subject to the provisions of the Subordinated Indenture relating to the duties of the Subordinated Indenture Trustee in case an Event of Default shall occur and be continuing, the Subordinated Indenture Trustee will be under no obligation to exercise any of its rights or powers under the Subordinated Indenture at the request or direction of any Holder, unless such Holder shall have offered to the Subordinated Indenture Trustee reasonable security or indemnity. (Section 903) Subject to such provisions of the indemnification of the Subordinated Indenture Trustee, the Holders of a majority in principal amount of the Outstanding Subordinated Debentures of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Subordinated Indenture Trustee, or exercising any trust or power conferred on the Subordinated Indenture Trustee, with respect to the Subordinated Debentures of that series. (Section 812) No Holder of a Subordinated Debenture of any series will have any right to institute any proceeding with respect to the Subordinated Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Subordinated Debentures of such series, (ii) the Holders of not less than a majority in aggregate principal amount of the Outstanding Subordinated Debentures of such series have made written request to the Subordinated Indenture Trustee, and such Holder or Holders have offered reasonable indemnity to the Subordinated Indenture Trustee, to institute such proceeding as trustee and (iii) the Subordinated Indenture Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Outstanding Subordinated Debentures of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 807) However, such limitations do not apply to a suit instituted by a Holder of a Subordinated Debenture for the enforcement of payment of the principal of or any premium or interest on such Subordinated Debenture on or after the applicable due date specified in such Subordinated Debenture. (Section 808) The Company will be required to furnish to the Subordinated Indenture Trustee annually, not later than October 1 in each year, a statement by an appropriate officer as to such officer's knowledge of the Company's compliance with all conditions and covenants under the Subordinated Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under the Subordinated Indenture. (Section 606) 40 44 RIGHT TO CURE At any time after the declaration of acceleration with respect to the Subordinated Debentures of any series has been made and before a judgment or decree for payment of the money due has been obtained, the Event or Events of Default giving rise to such declaration of acceleration will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if (a) the Company has paid or deposited with the Subordinated Indenture Trustee a sum sufficient to pay (1) all overdue interest on all Subordinated Debentures of such series; (2) the principal of and premium, if any, on any Subordinated Debentures of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Subordinated Debentures; (3) interest upon overdue interest at the rate or rates prescribed therefor in such Subordinated Debentures, to the extent that payment of such interest is lawful; and (4) all amounts due to the Subordinated Indenture Trustee under the Subordinated Indenture; and (b) any other Event or Events of Default with respect to the Subordinated Debentures of such series, other than the non-payment of the principal of the Subordinated Debentures of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the Subordinated Indenture. (Section 802) 45 MODIFICATION AND WAIVER Without the consent of any Holder of Subordinated Debentures, the Company and the Subordinated Indenture Trustee may enter into one or more supplemental indentures to the Subordinated Indenture for any of the following purposes: (a) to evidence the assumption by any permitted successor to the Company of the covenants of the Company in the Subordinated Indenture and the Subordinated Debentures; or (b) to add one or more covenants of the Company or other provisions for the benefit of the Holders of all or any series of Outstanding Subordinated Debentures or to surrender any right or power conferred upon the Company by the Subordinated Indenture; or (c) to add any additional Events of Default with respect to all or any series of Outstanding Subordinated Debentures; or (d) to change or eliminate any provision of the Subordinated Indenture or to add any new provision to the Subordinated Indenture, provided that if such change, elimination or addition will adversely affect the interests of the Holders of Subordinated Debentures of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when the consent of the Holders of such series so affected has been obtained or when there is no Subordinated Debenture of such series remaining Outstanding under the Subordinated Indenture; or (e) to provide collateral security for the Subordinated Debentures; or (f) to establish the form or terms of Subordinated Debentures of any series as permitted by the Subordinated Indenture; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for giving of notice to, and the solicitation of the vote or consent of, the Holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment of a separate or successor Subordinated Indenture Trustee under the Subordinated Indenture with respect to the Subordinated Debentures of one or more series and to add or to change any of the provisions of the Subordinated Indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the Subordinated Indenture by more than one trustee; or (i) to provide for the procedures required to permit the utilization of a noncertificated system of registration for any series of Subordinated Debentures; or (j) to change any place where (1) the principal of and premium, if any, and interest, if any, on any Subordinated Debentures shall be payable, (2) any Subordinated Debentures may be surrendered for registration of transfer or exchange and (3) notices and demands to or upon the Company in respect of Subordinated Debentures and the Subordinated Indenture may be served; or (k) to cure any ambiguity, to correct or supplement any defective or inconsistent provision or to make or change any other provisions with respect to matters and questions arising under the Subordinated Indenture, provided such changes or additions shall not adversely affect the interests of the Holders of Subordinated Debentures of any series in any material respect. (Section 1201) The Holders of not less than a majority in aggregate principal amount of the Outstanding Subordinated Debentures of any series may waive compliance by the Company with certain restrictive provisions of the Subordinated Indenture. (Section 607) The Holders of not less than a majority in principal amount of the Outstanding Subordinated Debentures of any series may waive any past default under the Subordinated Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Subordinated Indenture that cannot be modified or be amended without the consent of the Holder of each Outstanding Subordinated Debenture of such series affected. (Section 813) Without limiting the generality of the foregoing, if the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date of the Subordinated Indenture in such a way as to require changes to the Subordinated Indenture or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the Subordinated Indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the Subordinated Indenture, the Subordinated Indenture will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimination, and the Company and the Subordinated Indenture Trustee may, without the consent of any Holders, enter into one or more supplemental indentures to evidence or effect such amendment. (Section 1201) Except as provided above, the consent of the Holders of not less than a majority in aggregate principal amount of the Subordinated Debentures of all series then Outstanding, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the Subordinated Indenture pursuant to one or more supplemental indentures; provided, however, that if less than all of the series of Subordinated Debentures Outstanding are directly affected by a proposed supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of Outstanding Subordinated Debentures of all series so directly affected, considered as one class, will be required; and provided, further, that if the Subordinated Debentures of any series have been issued in more than one Tranche and if the proposed supplemental 42 46 indenture directly affects the rights of the Holders of one or more, but less than all, such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Subordinated Debentures of all Tranches so directly affected, considered as one class, will be required; and provided further, that no such supplemental indenture may (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Subordinated Debenture, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of any Discount Security that would be due and payable upon a declaration of acceleration of Maturity or change the coin or currency (or other property) in which any Subordinated Debenture or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity of any Subordinated Debenture (or, in the case of redemption, on or after the redemption date) without, in any such case, the consent of the Holder of such Subordinated Debenture, (b) reduce the percentage in principal amount of the Outstanding Subordinated Debentures of any series, or any Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of the Subordinated Indenture or any default thereunder and its consequences, or reduce the requirements for quorum or voting, without, in any such case, the consent of the Holder of each Outstanding Subordinated Debenture of such series or Tranche, or (c) modify certain of the provisions of the Subordinated Indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults with respect to the Subordinated Debentures of any series, or any Tranche thereof, without the consent of the Holder of each Outstanding Subordinated Debenture affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of the Subordinated Indenture which has expressly been included solely for the benefit of one or more particular series of Subordinated Debentures or one or more Tranches thereof, or modifies the rights of the Holders of Subordinated Debentures of such series or Tranches with respect to such covenant or other provision, will be deemed not to affect the rights under the Indenture of the Holders of the Subordinated Debentures of any other series or Tranche. (Section 1202) The Subordinated Indenture provides that in determining whether the Holders of the requisite principal amount of the Outstanding Subordinated Debentures have given any request, demand, authorization, direction, notice, consent, or waiver under the Subordinated Indenture as of any date, or whether or not a quorum is present at a meeting of Holders, (i) Subordinated Debentures owned by the Company or any other obligor upon the Subordinated Debentures or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all Securities Outstanding under this Subordinated Indenture, or all Outstanding Subordinated Debentures of each such series and each such Tranche, as the case may be, determined without regard to this clause (i)) shall be disregarded and deemed not to be Outstanding; (ii) the principal amount of a Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof as provided in the Subordinated Indenture; and (iii) the principal amount of a Subordinated Debenture denominated in one or more foreign currencies or a composite currency that will be deemed to be Outstanding will be the Dollar equivalent, determined as of such date in the manner prescribed for such Subordinated Debenture, of the principal amount of such Subordinated Debenture (or, in the case of a Subordinated Debenture described in clause (ii) above, of the amount described in such clause). (Section 101) If the Company shall solicit from Holders any request, demand, authorization, direction, notice, consent, election, waiver or other Act, the Company may, at its option, by Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, election, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, election, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the Outstanding Subordinated Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, direction, waiver or other Act, and for that purpose the Outstanding Subordinated Debentures shall be computed as of the record date. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Subordinated Debenture and the Holder of every Subordinated Debenture issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Subordinated Debenture. (Section 104) 43 47 DEFEASANCE Unless otherwise indicated in the applicable Prospectus Supplement, any Subordinated Debenture, or any portion of the principal amount thereof, will be deemed to have been paid for purposes of the Subordinated Indenture, and, at the Company's election, the entire indebtedness of the Company in respect thereof will be deemed to have been satisfied and discharged, if there has been irrevocably deposited with the Subordinated Indenture Trustee or any Paying Agent (other than the Company), in trust: (a) money in an amount which will be sufficient, or (b) Eligible Obligations (as described below), which do not contain provisions permitting the redemption or other prepaying thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide monies which, together with money, if any, deposited with or held by the Subordinated Indenture Trustee or such Paying Agent, will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Subordinated Debentures or portions thereof. (Section 701) For this purpose, unless otherwise indicated in the applicable Prospectus Supplement, Eligible Obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States, entitled to the benefit of the full faith and credit thereof, and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof. (Section 101) While the Company knows of no legal precedent on point, it is possible that, for federal income tax purposes, any deposit contemplated in the preceding paragraph could be treated as a taxable exchange of the related securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, Holders of such securities would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their securities. In addition, such Holders thereafter would be required to recognize for federal income tax purposes a share of the income, gain or loss of the trust. The amount so required to be recognized could be different from the amount that would be recognized in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of any such deposit. RESIGNATION OF SUBORDINATED INDENTURE TRUSTEE The Subordinated Indenture Trustee may resign at any time by giving written notice thereof to the Company or may be removed at any time by Act of the Holders of a majority in principal amount of Subordinated Debentures then Outstanding delivered to the Subordinated Indenture Trustee and the Company. No resignation or removal of the Subordinated Indenture Trustee and no appointment of a successor trustee will become effective until the acceptance of appointment by a successor trustee in accordance with the requirements of the Subordinated Indenture. So long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing and except with respect to a Subordinated Indenture Trustee appointed by Act of the Holders of a majority in principal amount of the Outstanding Subordinated Debentures, if the Company has delivered to the Trustee a resolution of its Board of Directors appointing a successor trustee and such successor has accepted such appointment in accordance with the terms of the Subordinated Indenture, the Subordinated Indenture Trustee will be deemed to have resigned and the successor will be deemed to have been appointed as trustee in accordance with the Subordinated Indenture. (Section 910) NOTICES Notices to Holders of Subordinated Debentures will be given by mail to the addresses of such Holders as they may appear in the Security Register. (Section 106) TITLE The Company, the Subordinated Indenture Trustee, and any agent of the Company or the Subordinated Indenture Trustee may treat the Person in whose name a Subordinated Debenture is registered as the absolute owner thereof (whether or not such Subordinated Debenture may be overdue) for the purpose of making payment and for all other purposes. (Section 308) GOVERNING LAW 44 48 The Subordinated Indenture and the Subordinated Debentures will be governed by, construed in accordance with, the laws of the State of New York, except to the extent the law of any other jurisdiction shall be mandatorily applicable. (Section 112) LIMITATION ON SUITS The Subordinated Indenture limits a Holder's right to institute any proceeding with respect to the Subordinated Indenture, the appointment of a receiver or trustee, or for any other remedy under the Subordinated Indenture. (Section 807) MAINTENANCE OF PROPERTIES The Subordinated Indenture provides that the Company shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith may be properly conducted; provided, however, that nothing shall prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. (Section 605) MODIFICATION OF SENIOR INDEBTEDNESS In general, the holders of Senior Indebtedness may, without in any manner affecting the subordination of the payment of principal of and premium, if any, and interest, if any, on the Subordinated Debentures in their absolute discretion agree with the Company to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness, or amend or supplement any instrument pursuant to which any Senior Indebtedness is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee. (Section 1509) RELATIONSHIP WITH THE SUBORDINATED INDENTURE TRUSTEE See "DESCRIPTION OF THE COLLATERAL TRUST BONDS -- Relationship with the Trustee" for a description of certain relationships between the Subordinated Indenture Trustee and the Company. GLOBAL SECURITIES Some or all of the Securities of any series may be represented, in whole or in part, by one or more global securities (each, a "Global Security") which will have an aggregate principal amount equal to that of the Securities represented thereby. Each Global Security will be registered in the name of a depositary (the "Depositary") or a nominee thereof identified in the applicable Prospectus Supplement, will be deposited with such Depositary or nominee or a custodian therefor and will bear a legend regarding the restrictions on exchanges and registration of transfer thereof referred to below and any such other matters as may be provided for pursuant to the Mortgage or Subordinated Indenture, as the case may be. As long as the Depositary, or its nominee, is the registered holder of a Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner and holder of such Global Security and the Securities represented thereby for all purposes under the Mortgage or the Subordinated Indenture, as the case may be. Except in limited circumstances, owners of beneficial interests in a Global Security will not be entitled to have such Global Security or any Securities represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated Securities in exchange therefor and will not be considered to be the owners or holders of such Global Security or any Securities represented thereby for any purpose under the Securities or, as 45 49 the case may be, the Mortgage or the Subordinated Indenture. All payments of principal of and any premium and interest on a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder thereof. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial interests in a Global Security. Ownership of beneficial interests in a Global Security will be limited to institutions that have accounts with the Depositary or its nominee ('participants") and to persons that may hold beneficial interests through participants. In connection with the issuance of any Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of Securities represented by the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the Depositary (with respect to participants' interests) or any such participant (with respect to interests of persons held by such participants on their behalf). Payments, transfers, exchanges, and other matters relating to beneficial interests in a Global Security may be subject to various policies and procedures adopted by the Depositary from time to time. None of the Company, the Mortgage Trustee or the Subordinated Indenture Trustee, or any agents of each of the foregoing, will have any responsibility or liability for any aspect of the Depositary's or any participant's records relating to, or for payments made on account of, beneficial interests in a Global Security, or for maintaining, supervising, or reviewing any records relating to such beneficial interests. EXPERTS The financial statements and schedule included in the latest Annual Report on Form 10-K of the Company have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto and are incorporated by reference herein in reliance upon the authority of said firm as experts in auditing and accounting in giving said report. LEGAL MATTERS The legality of the Securities will be passed upon for the Company by Stephen W. Southwick, Vice President, General Counsel & Secretary of the Company, 200 First Street S.E., Cedar Rapids, Iowa 52401, and by Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York 10004, and for any underwriters, dealers, agents or purchasers by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 50402. However, all matters pertaining to the Lien of the Mortgage, organization of the Company, titles to property and franchises will be passed upon by Stephen W. Southwick, Vice President, General Counsel & Secretary. 46 50 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance and distribution of the Securities, other than underwriting discounts and commissions are as follows: Registration Fee--Securities and Exchange Commission (actual).. $ 0 Printing and Engraving Cost ................................... $ 10,000 Trustee's Charges including Authentication .................... $ 7,000 Attorney's Fees and Expenses .................................. $ 75,000 Accountant's Fees and Expenses ................................ $ 35,000 Blue Sky Expenses ............................................. $ 1,000 Rating Agency Fees ............................................ $ 15,000 Recording and Listing Fees .................................... $ 30,000 Miscellaneous ................................................. $ 5,000 -------- Total ....................................... $178,000 ========
ITEM 15. INDEMNIFICATION. Section 490.851 of the Iowa Business Corporations Act ("IBCA") grants each corporation organized thereunder, such as the Registrant, the power to indemnify its directors and officers against liabilities for certain of their acts. Section 6.1 of the Registrant's Bylaws, as amended, provides for indemnification of directors and officers of the Registrant to the full extent permitted by Section 490.851 of the IBCA. Section 6.1 further requires the Registrant to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Registrant, or is or was serving at the request of the Registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted and incurred against such person in any such capacity or arising out of such person's status as such, whether or not the Registrant would have the power to indemnify such person against such liability under the provisions of Section 6.1. Section 2 of Article Ninth of the Registrant's Amended Articles of Incorporation, however, requires that the Registrant may, but is not required to, maintain such insurance. Section 490.832 of the IBCA grants corporations organized thereunder, such as the Registrant, the authority to adopt a provision in their respective articles of incorporation eliminating or limiting, with certain exceptions, the personal liability of a director to the corporation or to its shareholders for monetary damages for certain breaches of fiduciary duty as a director. Section 1 of Article Ninth of the Amended Articles of Incorporation of the Registrant eliminates the personal liability of each director except for liability (i) for any breach of the director's duty of loyalty to the Registrant or its shareholders, (ii) for acts or omissions not in good faith or which involve any intentional misconduct or knowing violation of the law, (iii) any transaction from which the director derived an improper personal benefit, or (iv) under Section 490.833 of the IBCA relating to liability for unlawful distribution. The foregoing statements are subject to the detailed provisions of Sections 490.832, 490.833 and 490.851 of the IBCA, Article Ninth of the Amended Articles of Incorporation of the Registrant and Section 6.1 of the Bylaws, as amended of the Registrant, as applicable and should be read in conjunction therewith for a more full understanding of their affect on the Registrant. The Registrant's directors' and officers' insurance policies are designed to reimburse the Registrant for any payments made by it pursuant to the foregoing indemnification provisions. II - 1 51 The proposed form of underwriting agreement for each of the Securities contains provisions under which the underwriters agree to indemnify the directors and officers of the Registrant against certain liabilities under the Securities Act of 1933, as amended (the "Act"). ITEM 16. EXHIBITS. See Exhibit Index on Page II - 6. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent Post-Effective Amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-3, or Form S-8, and the information required to be included in a Post-Effective Amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining liability under the Act, each such Post-Effective Amendment shall be deemed to be a new Registration Statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a Post-Effective Amendment any of the securities which remain unsold at the termination of the offering. (4) That for purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II - 2 52 Insofar as indemnification for liabilities arising under the Act, as amended, may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II - 3 53 POWER OF ATTORNEY Each person whose signature appears below authorizes Lee Liu, Larry D. Root, Thomas M. Walker and John E. Ebright, or any one of them, to execute in the name of each such person who is then an officer or director of the Registrant, and to file any amendments to, this Registration Statement, including post-effective amendments, necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, which amendments may make such changes in such Registration Statement as the above-named attorneys, or any of them, may deem appropriate. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cedar Rapids, State of Iowa, on the 25th day of July, 1997. IES UTILITIES INC. By: /s/ Larry D. Root ----------------------------------- Larry D. Root President & Chief Operating Officer Pursuant to the requirements of the Securities Act of 1933, as amended, such Registration Statement has been signed below on the 25th day of July, 1997, by the following persons in the capacities indicated: SIGNATURE TITLE --------- ----- /s/ Lee Liu Chairman of the Board & - ---------------------------------------- Chief Executive Officer and Director Lee Liu (Principal Executive Officer) /s/ Thomas M. Walker Executive Vice President & - ---------------------------------------- Chief Financial Officer Thomas M. Walker (Principal Financial Officer) /s/ John E. Ebright Controller & Chief Accounting Officer - ---------------------------------------- (Principal Accounting Officer) John E. Ebright /s/ C.R.S. Anderson Director - ---------------------------------------- C.R.S. Anderson /s/ J. Wayne Bevis Director - ---------------------------------------- J. Wayne Bevis II - 4 54 SIGNATURE TITLE --------- ----- /s/ Jack R. Newman Director - ---------------------------------------- Jack R. Newman /s/ Robert D. Ray Director - ---------------------------------------- Robert D. Ray /s/ David Q. Reed Director - ---------------------------------------- David Q. Reed /s/ Henry Royer Director - ---------------------------------------- Henry Royer /s/ Robert W. Schlutz Director - ---------------------------------------- Robert W. Schlutz /s/ Anthony R. Weiler Director - ---------------------------------------- Anthony R. Weiler II - 5 55 EXHIBIT INDEX EXHIBIT NUMBER LIST OF EXHIBITS - -------------- ---------------- 1(a) Proposed form of Underwriting Agreement relating to Collateral Trust Bonds ("Bonds"). 1(b) Proposed form of Underwriting Agreement relating to Subordinated Debentures to be issued under the Subordinated Indenture. 1(c) Proposed form of Underwriting Agreement relating to Senior Debentures to be issued under the Senior Unsecured Indenture. *4(a) Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, between the Company (formerly Iowa Electric Light and Power Company ("IE")) and The First National Bank of Chicago, as Trustee ("Mortgage") (Filed as Exhibit 4(c) to IE's Form 10-Q for the quarter ended September 30, 1993). *4(b) Supplemental Indentures to the Mortgage:
Number Dated as of File Reference Exhibit ------ ----------- -------------- ------- First October 1, 1993 Form 10-Q, 11/12/93 4(d) Second November 1, 1993 Form 10-Q, 11/12/93 4(e) Third March 1, 1995 Form 10-Q, 5/12/95 4(b) Fourth September 1, 1996 Form 8-K, 9/19/96 4(c)(i) Fifth April 1, 1997 Form 10-Q, 5/14/97 4(a)
4(c) Proposed form of __________ Supplemental Indenture establishing the series of Bonds (including form of Bonds). *4(d) Indenture of Mortgage and Deed of Trust, dated as of August 1, 1940, between the Company (formerly IE) and The First National Bank of Chicago, Trustee (1940 Indenture) (Filed as Exhibit 2(a) to IE's Registration Statement, File No. 2-25347). *4(e) Supplemental Indentures to the 1940 Indenture:
Number Dated as of IE File Reference Exhibit ------ ----------- ----------------- ------- First March 1, 1941 2-25347 2(a) Second July 15, 1942 2-25347 2(a) Third August 2, 1943 2-25347 2(a) Fourth August 10, 1944 2-25347 2(a) Fifth November 10, 1944 2-25347 2(a) Sixth August 8, 1945 2-25347 2(a) Seventh July 1, 1946 2-25347 2(a) Eighth July 1, 1947 2-25347 2(a) Ninth December 15, 1948 2-25347 2(a) Tenth November 1, 1949 2-25347 2(a) Eleventh November 10, 1950 2-25347 2(a) Twelfth October 1, 1951 2-25347 2(a) Thirteenth March 1, 1952 2-25347 2(a) Fourteenth November 5, 1952 2-25347 2(a) Fifteenth February 1, 1953 2-25347 2(a)
II - 6 56
Number Dated as of IE File Reference Exhibit ------ ----------- ----------------- ------- Sixteenth May 1, 1953 2-25347 2(a) Seventeenth November 3, 1953 2-25347 2(a) Eighteenth November 8, 1954 2-25347 2(a) Nineteenth January 1, 1955 2-25347 2(a) Twentieth November 1, 1955 2-25347 2(a) Twenty-first November 9, 1956 2-25347 2(a) Twenty-second November 6, 1957 2-25347 2(a) Twenty-third November 4, 1959 2-25347 2(a) Twenty-fourth November 3, 1959 2-25347 2(a) Twenty-fifth November 1, 1960 2-25347 2(a) Twenty-sixth January 1, 1961 2-25347 2(a) Twenty-seventh November 7, 1961 2-25347 2(a) Twenty-eighth November 6, 1962 2-25347 2(a) Twenty-ninth November 5, 1963 2-25347 2(a) Thirtieth November 4, 1964 2-25347 2(a) Thirty-first November 2, 1965 2-25347 2(a) Thirty-second September 1, 1966 Form 10-K, 1966 4.10 Thirty-third November 30, 1966 Form 10-K, 1966 4.10 Thirty-fourth November 7, 1967 Form 10-K, 1967 4.10 Thirty-fifth November 5, 1968 Form 10-K, 1968 4.10 Thirty-sixth November 1, 1969 Form 10-K, 1969 4.10 Thirty-seventh December 1, 1970 Form 8-K, 12/70 1 Thirty-eighth November 2, 1971 2-43131 2(g) Thirty-ninth May 1, 1972 Form 8-K, 5/72 1 Fortieth November 7, 1972 2-56078 2(i) Forty-first November 7, 1973 2-56078 2(j) Forty-second September 10, 1974 2-56078 2(k) Forty-third November 5, 1975 2-56078 2(l) Forty-fourth July 1, 1976 Form 8-K, 7/76 1 Forty-fifth November 1, 1976 Form 8-K, 12/76 1 Forty-sixth December 1, 1977 2-60040 2(o) Forty-seventh November 1, 1978 Form 10-Q, 6/30/79 1 Forty-eighth December 1, 1979 Form S-16, 2-65996 2(q) Forty-ninth November 1, 1981 Form 10-Q, 3/31/82 2 Fiftieth December 1, 1980 Form 10-K, 1981 4(s) Fifty-first December 1, 1982 Form 10-K, 1982 4(t) Fifty-second December 1, 1983 Form 10-K, 1983 4(u) Fifty-third December 1, 1984 Form 10-K, 1984 4(v) Fifty-fourth March 1, 1985 Form 10-K, 1984 4(w) Fifty-fifth March 1, 1988 Form 10-Q, 5/12/88 4(b) Fifty-sixth October 1, 1988 Form 10-Q, 11/10/88 4(c) Fifty-seventh May 1, 1991 Form 10-Q, 8/13/91 4(d) Fifty-eighth March 1, 1992 Form 10-K, 1991 4(c) Fifty-ninth October 1, 1993 Form 10-Q, 11/12/93 4(a) Sixtieth November 1, 1993 Form 10-Q, 11/12/93 4(b) Sixty-first March 1, 1995 Form 10-Q, 5/12/95 4(a) Sixty-second September 1, 1996 Form 8-K, 9/19/96 4(c)(i) Sixty-third April 1, 1997 Form 10-Q, 5/14/97 4(b)
4(f) Proposed form of __________ Supplemental Indenture providing for the issuance of Class "A" Bonds under the 1940 Indenture (including form of Class "A" Bonds). II - 7 57 *4(g) Indenture or Deed of Trust dated as of February 1, 1923, between the Company (successor to Iowa Southern Utilities Company (IS) as a result of merger of IS and IE) and The Northern Trust Company (The First National Bank of Chicago, successor) and Harold H. Rockwell (Richard D. Manella, successor), as Trustees (ISU 1923 Indenture) (Filed as Exhibit B-1 to File No. 2-1719). *4(h) Supplemental Indentures to the ISU 1923 Indenture:
Dated as of IS File Reference Exhibit ----------- ----------------- ------- May 1, 1940 2-4921 B-1-k May 2, 1940 2-4921 B-1-l October 1, 1945 2-8053 7(m) October 2, 1945 2-8053 7(n) January 1, 1948 2-8053 7(o) September 1, 1950 33-3995 4(e) February 1, 1953 2-10543 4(b) October 2, 1953 2-10543 4(q) August 1, 1957 2-13496 2(b) September 1, 1962 2-20667 2(b) June 1, 1967 2-26478 2(b) February 1, 1973 2-46530 2(b) February 1, 1975 2-53860 2(aa) July 1, 1975 2-54285 2(bb) September 2, 1975 2-57510 2(bb) March 10, 1976 2-57510 2(cc) February 1, 1977 2-60276 2(ee) January 1, 1978 0-849 2 March 1, 1979 0-849 2 March 1, 1980 0-849 2 May 31, 1986 33-3995 4(g) July 1, 1991 0-849 4(h) September 1, 1992 0-849 4(m) December 1, 1994 Form 10-K,1994 4(f)
*4(i) Indenture (For Unsecured Subordinated Debt Securities), dated as of December 1, 1995, between the Company and The First National Bank of Chicago, Trustee (Subordinated Indenture) (Filed as Exhibit 4(i) to the Company's Registration Statement, File No. 33-62259). 4(j) Indenture (For Senior Unsecured Debt Securities), dated as of _________, 1997, between the Company and The First National Bank of Chicago, Trustee (Senior Unsecured Indenture). 5 Opinion of Stephen W. Southwick, Vice President, General Counsel & Secretary as to the legality of the Securities (including consent of counsel). *12 Ratio of Earnings to Fixed Charges (Filed as Exhibit 12 to the Company's Form 10-Q for the quarter ended March 31, 1997). 23(a) Consent of Arthur Andersen LLP. 23(b) Consent of Stephen W. Southwick, Vice President, General Counsel & Secretary (contained in Exhibit 5). II - 8 58 24 Powers of Attorney (included on p. II - 4 of the Registration Statement). 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as Trustee under the Mortgage. 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as Trustee under the Subordinated Indenture. 25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as Trustee under the Senior Unsecured Indenture. 26 Form of Letter to Prospective Purchasers regarding the Securities. - ---------- * The exhibits listed above and marked with an asterisk were filed as exhibits to registration statements or reports previously filed with the Commission under the exhibit number and file reference number shown after each such exhibit, and they are hereby incorporated herein by reference. II - 9 EX-1.A 2 PROPOSED FORM OF UNDERWRITING AGREEMENT 1 EXHIBIT 1(a) UNDERWRITING AGREEMENT For the Purchase of Collateral Trust Bonds of IES Utilities Inc. IES UTILITIES INC. c/o Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1490 SECTION 1. Purchase and Sale. On the basis of the representations and warranties, and subject to the terms and conditions, set forth in this agreement ("Underwriting Agreement"), each Underwriter (defined below) shall purchase from IES Utilities Inc. ("Company"), severally and not jointly, and the Company shall sell to each of the Underwriters (defined below), the principal amount of the Company's Collateral Trust Bonds set forth opposite the name of such Underwriter in Schedule II hereto at the price specified in Schedule I hereto, plus accrued interest, if any, at the rate specified in Schedule I hereto. The aggregate principal amount of such Collateral Trust Bonds being sold hereunder is hereinafter referred to as the "Bonds." SECTION 2. Underwriters and Representative. The term "Underwriters," as used herein, shall be deemed to mean the several persons, firms, or corporations named in Schedule II hereto (including any substituted Underwriters under the provisions of Section 6), and the term "Representative," as used herein, shall be deemed to mean the representative or representatives of such Underwriters by whom or on whose behalf this Underwriting Agreement is signed. If there shall be one person, firm, or corporation named in said Schedule II, the term "Underwriters" and the term "Representative," as used herein, shall mean that person, firm, or corporation. All obligations of the Underwriters are several and not joint. The use of the term "Underwriter" herein shall not be deemed to establish or admit that a purchaser of the Bonds is an "Underwriter" of the Bonds as such term is defined in and used under the Securities Act of 1933, as amended ("Securities Act"). SECTION 3. Description of the Bonds. The Bonds shall be in the aggregate principal amount and shall mature on the date specified in Schedule I hereto, and shall be issued under and secured by the Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, of the Company to The First National Bank of Chicago as Trustee ("Trustee"), as supplemented by ____ supplemental indentures and as it will be further supplemented by a supplemental indenture ("Supplemental Indenture") relating to the Bonds. Said Indenture of Mortgage and Deed of Trust, as so supplemented, is hereinafter referred to as the "Mortgage". The Bonds shall bear interest at the rate per annum specified in Schedule I hereto. The Bonds and the Mortgage are more fully described in the Prospectus hereinafter referred to. SECTION 4. Representations and Warranties of the Company. The Company represents and warrants that: (a) It has filed with the Securities and Exchange Commission ("Commission") two registration statements (File Nos. 33-62259 and 333-_____) (collectively, the "Registration Statement") for the registration of up to an aggregate of $135,000,000 principal amount of the Company's debt securities under the Securities Act. Registration statements (File Nos. 33-62259 and 333-_____) have become effective. No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or threatened by the Commission. The prospectus (including the supplement thereto) forming a part of the Registration Statement, at that time pursuant to Item 12 of Form S-3, is hereinafter referred to as the "Basic Prospectus." In the event that the Basic Prospectus shall have been amended, revised, or supplemented (but excluding any amendments, revisions, or supplements to the Basic Prospectus relating solely to the offering of debt securities other than the Bonds) prior to the time of effectiveness of this Underwriting Agreement, and with respect to any documents filed by the Company pursuant to Section 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), after the time the Registration Statement initially became effective and up to the time of effectiveness of this Underwriting Agreement (but excluding documents incorporated therein by reference relating solely to the offering of debt securities other than the Bonds), which documents are deemed to be incorporated by reference in the Basic Prospectus, the term "Basic Prospectus" as used herein shall also mean such prospectus as so amended, revised, or supplemented. The Registration Statement as it initially became effective and as it may have been amended by any amendment thereto incorporated in the Basic Prospectus (including for these purposes as an amendment any document incorporated by reference in the Basic Prospectus) and the Basic Prospectus as it shall be supplemented to reflect the terms of offering and sale of the Bonds by a prospectus supplement ("Prospectus Supplement") to be filed with the Commission pursuant to Rule 424 under the Securities Act ("Rule 424"), are hereinafter referred to as the "Registration Statement" and the "Prospectus," respectively; (b) After the time of effectiveness of this Underwriting Agreement, the Company will not file (i) any amendment to the Registration Statement (except any amendment relating solely to the offering of debt securities other than the Bonds) or supplement to the Prospectus or (ii) prior to the time that the Prospectus is filed with the Commission pursuant to Rule 424, any document which is to be incorporated by reference in, or any supplement (including the Prospectus Supplement) to, the Basic Prospectus, in either case without prior notice to the Representative and Dorsey & Whitney LLP ("Counsel for the Underwriters"), or any such amendment, supplement, or document to which said Counsel shall reasonably object on legal grounds in writing. For purposes of this Underwriting Agreement, any document filed with the Commission after the effectiveness of this Underwriting Agreement and incorporated by reference in the Prospectus (except documents incorporated by reference relating solely to the offering of debt securities other than the Bonds) pursuant to Item 12 of Form S-3 shall be deemed a supplement to the Prospectus; (c) The Registration Statement, at the time of its effectiveness, fully complied, the Mortgage, at the time of its execution, will fully comply, and the Prospectus, when filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may then be supplemented or amended, will fully comply, in all material respects with the applicable provisions of the Securities Act, the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"), and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations will be deemed to comply therewith; the documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, on the date first filed with the Commission pursuant to the Exchange Act, fully complied and on the date the Prospectus is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined) will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations were or will be deemed to comply therewith; on the date of effectiveness of the Registration Statement and any post-effective amendment thereto (but excluding in each case any post-effective amendment relating solely to the offering of debt securities other than the Bonds) or, if later than such dates, on the date that the Company's most recent annual report on Form 10-K was filed with the Commission under the Exchange Act, the Registration Statement, as amended by any such post-effective amendment, did not or will not, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, at the date it is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may be amended or supplemented, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and on said dates and at such times, the documents then incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, when read together with the Prospectus, or the Prospectus as it may then be amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subsection (c) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter for use in connection with the preparation of the Registration Statement or the Prospectus, as they may be amended or supplemented, or to any statements in or omissions from the statement of eligibility, as it may be amended, under the Trust Indenture Act of the Trustee under the Mortgage; (d) The Federal Energy Regulatory Commission has authorized the issuance and sale of the Bonds; such authorization is in full force and effect; the issuance and sale of the Bonds pursuant to this Underwriting Agreement will not violate the terms of such authorization; and no other authorization, approval or consent of any other governmental body or regulatory authority is legally required for the issuance and sale of the Bonds pursuant to this Underwriting Agreement, except such as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under the state securities or "blue sky" laws in connection with the purchase and distribution of the Bonds by the Underwriters; (e) The Company is a corporation duly incorporated, and validly existing, and in good standing under the laws of the State of Iowa and has full power and authority (corporate and other) under such laws to own its properties and to conduct its business as described in the Registration Statement and the Prospectus; and the Company does not own or lease substantial properties or conduct its business in any state other than the State of Iowa; (f) The Bonds have been duly authorized, and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by and secured by the Mortgage; the Supplemental Indenture will be substantially in the form filed as an exhibit to the Registration Statement; the Supplemental Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee, will constitute a valid and legally binding instrument, enforceable in accordance with its terms, except as limited by the Public Utility Registration Act pursuant to Ch. 476 of the Iowa Code et seq., and except in each case as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Bonds and the Mortgage will conform in all material respects to the descriptions thereof in the Prospectus; (g) The Class "A" Bonds, upon the basis of which the Bonds are to be issued, have been duly authorized, and, when issued and delivered to the Trustee pursuant to the Mortgage, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided and secured by the 1940 Indenture (as defined in the Mortgage); the __________ Supplemental Indenture to the 1940 Indenture will be substantially in the form filed as an exhibit to the Registration Statement; the __________ Supplemental Indenture has been duly authorized and, when executed and delivered by the Company and the trustee under the 1940 Indenture, will constitute a valid and binding instrument, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws affecting enforcement of mortgages or other creditors' rights and general equity principles; and the Class "A" Bonds and the 1940 Indenture will conform in all material respects to the descriptions thereof in the Prospectus; (h) The ISU 1923 Indenture (as defined in the Mortgage) conforms in all material respects to the description thereof in the Prospectus; and (i) The consummation by the Company of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Company's Articles of Incorporation or Bylaws, as amended, or of any indenture or other agreement or instrument to which the Company is now a party, including the Agreement and Plan of Merger by and among WPL Holdings, Inc., IES Industries Inc., and Interstate Power Company, dated as of November 10, 1995, as amended. SECTION 5. Offering. Forthwith upon the execution of this Underwriting Agreement, the Representative, acting on behalf of the Underwriters, shall advise the Company whether a public offering of the Bonds is to be made, and, if so, shall furnish to the Company (which information shall be confirmed in writing as soon as practicable thereafter) (a) the information with respect to such offering of the Bonds and related matters that is required to complete the Prospectus Supplement or any post-effective amendment to the Registration Statement which may be required and a copy of any "agreement among underwriters"; (b) if a post-effective amendment to the Registration Statement is required, a consent, if necessary, to the filing of the post-effective amendment or an acceptable power-of-attorney authorizing an available individual to sign the consent on its behalf; and (c) such further information, if any, as may be required to be furnished by the Company under the Federal Power Act. Such information and the power-of-attorney may be provided by telecopier (in the case of the power-of-attorney, followed promptly by an executed copy). Nothing in this Underwriting Agreement shall be construed to require that the Underwriters make any such public offering on a "fixed price" basis. The Representative agrees to notify the Company in writing of any change in the plan of distribution of the Bonds that would require a supplement to the Prospectus or an amendment to the Registration Statement. SECTION 6. Time and Place of Closing. Delivery of the Bonds and payment therefor by check or checks, payable to the Company or its order, in New York, New York, or by wire transfer, in immediately available funds, shall be made at the offices of Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York, at 10:00 A.M., New York time, on __________, or at such other place, time, and/or date as the Representative and the Company may agree upon in writing or as may be established in accordance with the following paragraph. The hour and date of such delivery and payment are herein called the "Closing Date." The Bonds shall be delivered to the Representative for the respective accounts of the Underwriters in registered form in such authorized denominations and registered in such names as the Representative may reasonably request in writing at least two business days prior to the Closing Date, or, to the extent not so requested, in the names of the respective Underwriters in such denominations as the Company shall determine. For the purpose of expediting the checking of the Bonds by the Representative, the Company agrees to make the Bonds available to the Representative for checking not later than 2:30 P.M., New York time, on the last business day preceding the Closing Date, at the New York office of The First National Bank of Chicago, or at such other place, time, and/or date as may be agreed upon between the Company and the Representative. If any Underwriter shall fail or refuse (otherwise than for some reason sufficient to justify, in accordance with the terms hereof, the cancellation or termination of its obligations hereunder) to purchase and pay for the principal amount of Bonds that it has agreed to purchase and pay for hereunder, the Company shall immediately give notice to the Representative of the default of such Underwriter, and the other Underwriters shall have the right within twenty-four (24) hours after the receipt of such notice by the Representative to determine to purchase, or to procure one or more others, who are members of the National Association of Securities Dealers, Inc. ("NASD") (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), and satisfactory to the Company, to purchase, upon the terms herein set forth, the principal amount of Bonds that the defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter or Underwriters shall determine to exercise such right, the Representative shall give written notice to the Company of such determination within twenty-four (24) hours after it shall have received notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. If in the event of such a default the Representative shall fail to give such notice, or shall within such twenty-four (24) hour period give written notice to the Company that no other Underwriter or Underwriters, or others, will exercise such right, then this Underwriting Agreement may be terminated by the Company, upon like notice given to the Representative, within a further period of twenty-four (24) hours. If in such case the Company shall not elect to terminate this Underwriting Agreement, it shall have the right, irrespective of such default: (a) to require such non-defaulting Underwriters to purchase and pay for the respective principal amounts of Bonds that they had severally agreed to purchase hereunder, as hereinabove provided, and, in addition, the principal amount of Bonds that the defaulting Underwriter shall have so failed to purchase up to a principal amount thereof equal to one-ninth (1/9th) of the respective principal amounts of Bonds that such non-defaulting Underwriters have otherwise agreed to purchase hereunder, and/or (b) to procure one or more others, who are members of the NASD (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), to purchase, upon the terms herein set forth, the principal amount of Bonds that such defaulting Underwriter had agreed to purchase, or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a). In the event the Company shall exercise its rights under clause (a) and/or (b) above, the Company shall give written notice thereof to the Representative within such further period of twenty-four (24) hours, and, thereupon, the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. In the event the Company shall be entitled to but shall not elect to exercise its rights under clause (a) and/or (b), the Company shall be deemed to have elected to terminate this Underwriting Agreement. Any action taken by the Company under this Section 6 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement. Termination by the Company under this Section 6 shall be without any liability on the part of the Company or any non-defaulting Underwriter, except as otherwise provided in subsection (g) of Section 7. In the computation of any period of twenty-four (24) hours referred to in this Section 6, there shall be excluded a period of twenty-four (24) hours in respect of each Saturday, Sunday, or legal holiday which would otherwise be included in such period of time. SECTION 7. Covenants of the Company. The Company agrees with each of the Underwriters: (a) To deliver to the Representative a signed copy of the Registration Statement as originally filed and of all amendments thereto relating to the Bonds or a conformed copy thereof certified by an officer of the Company to be in the form filed. (b) To deliver to the Underwriters, through the Representative, prior to 10:00 A.M. New York time on the business day after the date on which this Underwriting Agreement becomes effective as many copies of the Prospectus as the Representative may reasonably request. (c) To cause the Prospectus to be filed with the Commission pursuant to and in compliance with Rule 424, and to advise the Representative promptly of the issuance of any stop order under the Securities Act with respect to the Registration Statement or the institution of any proceedings therefor of which the Company shall have received notice. The Company will use its best efforts to prevent the issuance of any such stop order and to secure the prompt removal thereof if issued. (d) During such period of time (not exceeding nine months) after the Prospectus has been filed with the Commission pursuant to Rule 424 as the Underwriters are required by law to deliver a prospectus, if any event relating to or affecting the Company or of which the Company shall be advised in writing by the Representative shall occur which in the Company's opinion should be set forth in a supplement or amendment to the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Bonds, not misleading, to notify the Representative of such event and to amend or supplement the Prospectus by either (i) preparing and filing with the Commission and furnishing to the Representative at the Company's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus or (ii) making an appropriate filing pursuant to Section 13, 14, or 15(d) of the Exchange Act, which will supplement or amend the Prospectus so that, as supplemented or amended, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Bonds, not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then the Underwriters shall assume the expense of preparing any such amendment or supplement. In case any Underwriter is required to deliver a prospectus after the expiration of nine months from the date the Prospectus is filed with the Commission pursuant to Rule 424, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus or supplements or amendments to the Prospectus complying with Section 10(a) of the Securities Act. (e) During such period of time after the date the Prospectus is filed with the Commission pursuant to Rule 424 as a prospectus relating to the Bonds is required to be delivered under the Securities Act, to file promptly all documents required to be filed with the Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act. (f) To make generally available to the Company's security holders as soon as practicable an earning statement (which need not be audited) in reasonable detail covering a period of at least twelve months beginning after the "effective date of the registration statement" within the meaning of Rule 158 under the Securities Act, which earning statement shall be in such form, and be made generally available to security holders in such a manner, as to comply with the requirements of Section 11(a) of the Securities Act and Rule 158 promulgated under the Securities Act. (g) Except as herein otherwise provided, to pay all expenses and taxes (except transfer taxes) in connection with (i) the preparation and filing of the Registration Statement and any amendments thereto, (ii) the issuance, printing, and delivery of the Bonds, (iii) the preparation, execution, filing, and recording of the Supplemental Indenture, (iv) any fees charged by securities rating services for rating the Bonds and (v) the typing, printing, and delivery to the Underwriters, through the Representative, of reasonable quantities of copies of the Registration Statement and the Prospectus, and any amendment or supplement thereto, except as otherwise provided in paragraph (d) of this Section. The Company shall not, however, be required to pay any amount for any expenses of the Representative or any of the Underwriters, except that, if this Underwriting Agreement shall be terminated in accordance with the provisions of Section 8, 9, or 11, the Company will reimburse the Representative for (i) the reasonable fees and disbursements of counsel for the Underwriters, whose fees and disbursements the Underwriters agree to pay in any other event, and (ii) their reasonable out-of-pocket expenses, in an amount not exceeding a total of ten thousand dollars ($10,000), incurred in contemplation of the performance of this Underwriting Agreement. The Company shall not in any event be liable to any of the Underwriters for damages on account of loss of anticipated profits. (h) Not to sell any additional Collateral Trust Bonds (other than Collateral Trust Bonds of one or more series having a maturity or maturities different from the date of maturity of the Bonds) without the consent of the Representative until the earlier to occur of (i) the Closing Date or (ii) in the case of an initial public offering at a fixed price by the Underwriters, the date of the termination of the fixed price offering restrictions applicable to the Underwriters. The Representative agrees to notify the Company of such termination if it occurs prior to the Closing Date. SECTION 8. Conditions of Underwriters' Obligations. The obligation of the Underwriters to purchase and pay for the Bonds shall be subject to the accuracy of the representations and warranties made herein on the part of the Company and to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and at the Closing Date the Representative shall have received a certificate, dated the Closing Date and signed by an officer of the Company, to the effect that no such stop order has been or is in effect and that no proceedings for such purpose are pending before, or to the knowledge of the Company threatened by, the Commission. (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Bonds shall be in full force and effect; (d) At the Closing Date, the Representative shall have received from ____________, counsel for IES Industries Inc., Winthrop, Stimson, Putnam & Roberts, counsel to the Company, and Dorsey & Whitney LLP, counsel for the Underwriters, opinions in substantially the form and substance set forth in Exhibits A, B, and C hereto, respectively, (i) with such changes therein as may be agreed upon by the Company and the Representative, with the approval of counsel for the Underwriters, and (ii) if the Prospectus relating to the Bonds shall be supplemented after the Prospectus shall have been filed with the Commission pursuant to Rule 424, with changes therein to reflect such supplementation. (e) On the Closing Date, the Representative shall have received from Arthur Andersen LLP a letter dated the Closing Date, in substantially the form and substance set forth in Exhibit D hereto. (f) At the Closing Date, the Representative shall have received a certificate of the Company dated the Closing Date and signed by a Vice President of the Company, to the effect that (i) the Federal Energy Regulatory Commission has authorized the issuance and sale of the Bonds and such authorization is in full force and effect, to the best knowledge of the signer; (ii) since the most recent date as of which information is given in the Prospectus, as it may have been amended or supplemented, there has not been any material adverse change in the business, property, or financial condition of the Company and there has not been any material transaction entered into by the Company, other than transactions in the ordinary course of business, in each case other than as referred to in, or contemplated by, the Prospectus, as it may have been amended or supplemented; and (iii) to the best knowledge of the signer, the representations and warranties of the Company in this Underwriting Agreement are true and correct in all material respects at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date. (g) All legal proceedings to be taken in connection with the issuance and sale of the Bonds shall have been satisfactory in form and substance to Counsel for the Underwriters. If any of the conditions specified in this Section 8 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the principal amount of the Bonds, upon notice thereof to the Company. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 9. Conditions of Company's Obligations. The obligations of the Company hereunder shall be subject to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date. (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Bonds shall be in full force and effect. In case any of the conditions specified in this Section 9 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Company upon notice thereof to the Representative. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 10. Indemnification. (a) The Company shall indemnify, defend, and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law. The Company shall reimburse each such Underwriter and controlling person for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a preliminary prospectus (if used prior to the initial effective date of the Registration Statement), or in the Basic Prospectus (if used prior to the date that the Prospectus is filed with the Commission pursuant to Rule 424) or in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been made), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the indemnity agreement contained in this paragraph shall not apply to any such losses, claims, damages, liabilities, expenses, or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement which shall constitute the statement of eligibility under the Trust Indenture Act of the Trustee under the Indenture; and provided further, that the indemnity agreement contained in this paragraph shall not inure to the benefit of any Underwriter or of any person controlling any Underwriter on account of any such losses, claims, damages, liabilities, expenses, or actions arising from the sale of the Bonds to any person if there shall not have been given or sent to such person on behalf of such Underwriter (i) with or prior to the written confirmation of the sale to such person a copy of the Prospectus, as then amended or supplemented (exclusive for this purpose of any amendment or supplement relating solely to any offering of debt securities other than the Bonds and of any document which becomes incorporated by reference pursuant to Item 12 of Form S-3 more than 3 business days prior to the date hereof), and (ii) as soon as available after such written confirmation a copy of any amendment or supplement to the Prospectus (exclusive for this purpose of any document incorporated by reference pursuant to Item 12 of Form S-3) which the Company shall thereafter furnish, pursuant to subsection (d) of Section 7 hereof, relating to an event occurring prior to the payment for and delivery to such person of the Bonds involved in such sale. The indemnity agreement of the Company contained in this Section and the representations and warranties of the Company contained in Section 4 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any such controlling person, and shall survive the delivery of the Bonds. (b) Each Underwriter shall indemnify, defend, and hold harmless the Company, its directors and officers, and each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law and shall reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any action, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of such Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof. The indemnity agreement of the respective Underwriters contained in this paragraph shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company, its directors or officers, or any such controlling person, and shall survive the delivery of the Bonds. (c) The Company and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder, but the omission so to notify the indemnifying party or parties of any such action shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, the indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of the action, in which event the defense shall be conducted by counsel chosen by such indemnifying party or parties and satisfactory to the indemnified party or parties who shall be a defendant or defendants in the action, and the indemnified defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of the action, the indemnifying party will reimburse the indemnified party or parties for the reasonable fees and expenses of any counsel retained by the indemnified party or parties. If the indemnifying party does not employ counsel to take charge of the defense or if counsel for the indemnifying party reasonably concludes that there may be defenses available to the indemnified party which are different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to assume the defense on behalf of the indemnified party), legal expenses (limited to those of one counsel for all indemnified parties) and other expenses reasonably incurred by the indemnified party will be paid by the indemnifying party. No party will be liable with respect to any settlement made without its prior written consent. (d) If the indemnification provided for in this Section 10 is unavailable to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statements of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statements or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Bonds underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The respective obligations of the Company and the Underwriters under this Section 10 shall be in addition to any liability which each of them may otherwise have. SECTION 11. Termination. This Underwriting Agreement may be terminated at any time prior to the Closing Date by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the aggregate principal amount of the Bonds, if, prior to such time, (i) trading in securities on the New York Stock Exchange shall have been generally suspended, (ii) minimum or maximum ranges for prices shall have been generally established on the New York Stock Exchange by the New York Stock Exchange, the Commission, or other governmental authority, (iii) a general banking moratorium shall have been declared by federal or New York State authorities, (iv) an outbreak or escalation of hostilities or other national or international calamity or crisis occurs, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Representative, to make it impracticable to market the Bonds or enforce contracts for the sale of the Bonds or (v) in the reasonable judgment of the Representative, the subject matter of any amendment or supplement (prepared by the Company) to the Basic Prospectus, the Registration Statement or the Prospectus (except for information relating to the public offering of the Bonds or to the activity of any Underwriter or Underwriters) filed or issued after the effectiveness of this Underwriting Agreement by the Company shall have materially impaired the marketability of the Bonds. Any termination hereof pursuant to this Section 11 shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 12. Applicable Law. This Underwriting Agreement and the Bonds to be sold hereunder shall be New York contracts, and their validity and interpretation shall be governed by the laws of the State of New York. SECTION 13. Successors. This Underwriting Agreement shall inure to the benefit of the Company, the Underwriters and, with respect to the provisions of Section 10, each director, officer, and controlling person referred to in Section 10, and their respective successors. Nothing herein is intended or shall be construed to give to any other person, firm, or corporation any legal or equitable right, remedy, or claim under or in respect of any provision in this Underwriting Agreement. The term "successor" as used in this Underwriting Agreement shall not include any purchaser, as such purchaser, of any of the Bonds from any of the Underwriters. SECTION 14. Notices. All communications hereunder shall be in writing and, if to the Underwriters, shall be mailed or delivered to the Representative at the address set forth below, or, if to the Company, shall be mailed or delivered to it c/o IES Utilities Inc., 200 First Street, S.E., Cedar Rapids, Iowa 52401 Attention: Treasurer. SECTION 15. Counterparts. This Underwriting Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of such counterparts, when so executed and delivered, shall be deemed to be an original, and all of such counterparts shall, taken together, constitute one and the same agreement. ----------- 2 The stated interest rate to be borne by the Bonds and the price to be paid to the Company therefor (stated as a percentage of the principal amount of the Bonds), in each case are set forth in Schedule I hereto. If said interest rate and price and this Underwriting Agreement are in accordance with your understanding of our agreement, please indicate your acceptance thereof in the space provided below for that purpose; whereupon, this letter and your acceptance shall constitute a binding agreement between the Company and the several Underwriters in accordance with its terms. Very truly yours, As Representative(s) of the Underwriters By: -------------------------------------- Name: Title: Address of Representative(s): The foregoing Underwriting Agreement is hereby accepted as of the date set forth below: IES UTILITIES INC. By: -------------------------- Name: Title: Date: 3 SCHEDULE I Underwriting Agreement dated Registration Statements (Nos. 33-62259 and 333-_____) Securities: Designation: Collateral Trust Bonds ___% Series Due ____ Principal Amount: $ Date of Maturity: Interest Rate: ___% Commencement of Interest Accrual: Purchase Price: ___% Public Offering Price: ___% Closing Date: 4 SCHEDULE II Principal Amount Name of Underwriter of Bonds - - ------------------- ---------------- $---------- Total $========== 5 EXHIBIT A [Letterhead of IES Industries Inc.] [Date] Re: $__________ Collateral Trust Bonds ___% Series Due ____ Ladies and Gentlemen: I am counsel for IES Industries Inc., the parent company of IES Utilities Inc. (the "Company") and have participated in the issuance and sale by the Company to you of $__________ aggregate principal amount of Collateral Trust Bonds ___% Series Due ____ (the "Bonds"), issued under the Company's Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, to The First National Bank of Chicago, as Trustee (the "Trustee"), as heretofore supplemented and as supplemented by the _____ Supplemental Indenture dated as of __________ (the "Supplemental Indenture") (said Mortgage of Indenture and Deed of Trust as so supplemented is herein referred to as the "Mortgage") pursuant to an Underwriting Agreement dated as of __________ between you and the Company (the "Underwriting Agreement"). In this connection, I, or attorneys under my general supervision, have examined, among other things, the following: (a) the Registration Statement and the Prospectus (such terms having the same meanings herein as in the Underwriting Agreement); (b) the Articles of Incorporation of the Company and all amendments thereto, as certified by the Secretary of State of the State of Iowa; (c) a Certificate of the Secretary of State or other appropriate state official certifying as to the good standing and qualification of the Company to transact business in the State of Iowa; (d) the By-laws of the Company, certified by the Secretary of the Company; (e) the Mortgage; (f) the Company's Indenture of Mortgage and Deed of Trust dated as of August 1, 1940, to The First National Bank of Chicago, as trustee, as amended and supplemented and as it is further supplemented by the _____ Supplemental Indenture, dated as of __________ (the "1940 Supplemental Indenture"), pursuant to which certain First Mortgage Bonds of the Company (the "Class "A" Bonds") have been issued (said Mortgage and Deed of Trust as so amended and supplemented is herein referred to as the "1940 Indenture"); (g) the Company's Indenture of Mortgage and Deed of Trust dated as of February 1, 1923, to The First National Bank of Chicago, as trustee, as amended and supplemented ("ISU 1923 Indenture"); (h) Resolutions of the Executive Committee of the Board of Directors of the Company dated _________, and the Chairman's Certificate dated ___________, pertaining to the authorization and sale of the Bonds, the terms and conditions thereof and related matters; (i) Abstracts of Title and Certificates for title searches covering all pertinent county records in the various counties in which property of the Company is situated, together with title opinions of counsel deemed by me to be competent and reputable and upon whom I believe I am justified in relying as to such matters; (j) copies of franchises of the Company and the proceedings under which they were granted; (k) the Application filed by the Company with the Federal Energy Regulatory Commission seeking, among other things, authority for and approval of the issuance and sale of Bonds and a copy of the Letter of Authority issued by the Chief Accountant of such Commission, dated __________, authorizing and approving the issuance and sale of the Bonds; (l) counterparts of the Underwriting Agreement executed by you and the Company; and (m) other information, documents, and material which I deem sufficient along with the foregoing to support this opinion. In addition, in connection with this opinion, I have reviewed various orders and certificates of, and members of the legal staff of IES Industries Inc. had telephone conversations with, public officials. I have not examined the Bonds, except a specimen thereof. 6 Subject to the foregoing and to the further exceptions and qualifications set forth below and having regard to all legal and factual considerations which I deem relevant and based upon all such other information and documents furnished to or obtained by me as I believe necessary to enable me to render this opinion, including certificates of public officials, I am of the opinion that: 1. The Company has been duly incorporated and is validly existing and in good standing as a corporation under the laws of the State of Iowa, with full power and authority (corporate and other) to own its property and to conduct its business as presently being conducted all within the State of Iowa. 2. The Bonds, the Mortgage, the Class "A" Bonds, the 1940 Indenture and the ISU 1923 Indenture conform in all material respects to the descriptions thereof in the Prospectus. 3. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company. 4. The Class "A" Bonds have been duly authorized and, when duly executed, authenticated, issued and delivered to the Trustee, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the 1940 Indenture, enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether or not enforceability is considered in a proceeding in equity or at law). 5. The Bonds have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Mortgage, enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether or not enforceability is considered in a proceeding in equity or at law). 6. The Mortgage, the 1940 Indenture, and the ISU 1923 Indenture have been duly and validly authorized by all necessary corporate action of the Company, have been duly executed, acknowledged and delivered by the Company and are valid and legally binding instruments enforceable against the Company in accordance with their terms, except as limited by laws with respect to or affecting the remedies to enforce the security provided by the Mortgage, which laws do not, in my opinion, make inadequate the remedies necessary for the realization of the benefits of such security, and except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 7. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by, the Company of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company, the Mortgage, the 1940 Indenture or the ISU 1923 Indenture, or to the best of my knowledge after reasonable investigation, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound, including the Agreement and Plan of Merger, by and among, WPL Holdings, Inc., IES Industries Inc., Interstate Power Company (a Delaware corporation), WPLH Acquisition Co., and Interstate Power Company (a Wisconsin corporation), dated as of November 10, 1995, as amended. 8. The Company has good and valid title to all of the principal properties subject to the lien of the Mortgage, subject only to (a) Permitted Liens (as defined in the Mortgage), (b) the prior lien of the 1940 Indenture on certain properties of the Company, (c) the prior lien of the ISU 1923 Indenture on certain other properties of the Company and (d) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of a similar character and magnitude; and the Company possesses the power of eminent domain with respect to its present public utility operations. 9. The references in the Mortgage to the descriptions in the 1940 Indenture and the ISU 1923 Indenture of the properties subject to the lien of the 1940 Indenture and the ISU 1923 Indenture are adequate to constitute the Mortgage a lien on such properties, subject only to (a) Permitted Liens (as defined in the Mortgage), (b) the prior lien of the 1940 Indenture on certain properties of the Company, (c) the prior lien of the ISU 1923 Indenture on certain other properties of the Company and (d) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of a similar character and magnitude; the Mortgage constitutes a valid direct mortgage lien upon all physical properties in the State of Iowa acquired by the Company after the date of the Mortgage, subject only to (v) Permitted Liens (as defined in the Mortgage), (w) the prior lien of the 1940 Indenture on certain properties of the Company, (x) the prior lien of the ISU 1923 Indenture on certain other properties of the Company, (y) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of a similar character and magnitude and (z) liens, charges or encumbrances existing or placed thereon at the time of acquisition. 10. The 1940 Indenture constitutes a valid direct first mortgage lien upon all properties subject to the lien thereof, subject only to (a) Permitted Encumbrances as defined therein, and (b) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of a similar character and magnitude; the 1940 Indenture constitutes and will constitute a valid direct first mortgage lien upon all physical properties and franchises in the State of Iowa acquired by the Company after the date of the 1940 Indenture until the Merger of Iowa Southern Utilities Company into the Company on December 31, 1993, and on all property thereafter acquired by the Company other than property which is appurtenant to the property owned by Iowa Southern Utilities Company immediately prior to such merger, subject only to (x) Permitted Encumbrances (as defined therein), (y) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of similar character and magnitude, and (z) any liens, charges or encumbrances existing or placed thereon at the time of acquisition. 11. The ISU 1923 Indenture constitutes a valid direct first mortgage lien upon all properties subject to the lien thereof, subject only to (a) Permitted Liens as defined therein, and (b) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of a similar character and magnitude; the ISU 1923 Indenture constitutes and will constitute a valid direct first mortgage lien upon all physical properties and franchises in the State of Iowa acquired by Iowa Southern Utilities Company after the date of the ISU 1923 Indenture until the Merger of Iowa Southern Utilities Company into the Company on December 31, 1993, and, on all property thereafter acquired by the Company which is appurtenant to the property owned by Iowa Southern Utilities Company immediately prior to such merger, subject only to (x) Permitted Liens (as defined therein), (y) minor restrictions, exceptions and reservations in conveyance and defects which are of a nature ordinarily found in property of similar character and magnitude, and (z) any liens, charges or encumbrances existing or placed thereon at the time of acquisition. 12. The Mortgage, the 1940 Indenture, and the ISU 1923 Indenture have been duly filed and recorded in all jurisdictions in which it is necessary for the Mortgage, the 1940 Indenture, and the ISU 1923 Indenture to be filed and recorded in order to constitute a lien of record on the property subject thereto; appropriate financing statements have been filed in the appropriate offices in the State of Iowa; and each such recording or filing is fully effective to give constructive notice of the contents of each such recorded or filed document to all purchasers, mortgagees and secured parties (except for after-acquired property) covered thereby. 13. The Chief Accountant of the Federal Energy Regulatory Commission ("FERC") has authorized the issuance and sale of the Bonds, which authorization is, to the best of my knowledge, still in full force and effect; the issuance and sale of the Bonds to you pursuant to the Underwriting Agreement are in conformity with the terms of such authorization; and no other authorization, approval or consent of any other governmental body is legally required for the issuance and sale of the Bonds pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), and such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by you. 14. Except as referred to in the Registration Statement and Prospectus, to the best of my knowledge, there are no material or contemplated legal proceedings to which the Company is or may be a party or of which property of the Company is or may be subject which depart from the ordinary routine litigation incident to the kinds of business conducted by the Company. 15. The documents incorporated by reference in the Prospectus (other than the financial statements and financial and statistical data, as to which I express no opinion), when they were filed with the Securities and Exchange Commission (the "Commission"), complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder of the Commission; and I have no reason to believe that any of such documents, when they were so filed, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading. 16. To the best of my knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. 17. The Company has the legal right to function and operate as an electric and gas utility in the State of Iowa, holds valid and subsisting franchises authorizing it to carry on the utility business in which it is engaged in all incorporated communities having a population of 1,000 or more [(except in ______________, Iowa, where operations have not been impaired by the expiration of such franchises)], and has adequate licenses and permits where required by law to maintain electric and gas transmission and distribution lines through unincorporated areas and over public lands not located in incorporated communities and over private rights-of-way in the territory which it serves. I am a member of the bar of the State of Iowa and do not hold myself out as an expert on the laws of any other State. With respect to the opinions set forth in Paragraphs 4, 5, and 6 above, I call your attention to the fact that the provisions of the Atomic Energy Act of 1954, as amended, and regulations promulgated thereunder impose certain licensing and other requirements upon persons (such as the Trustee, as defined in the Mortgage, or other purchasers pursuant to the remedial provisions of the Mortgage, the 1940 Indenture, or the ISU 1923 Indenture) who seek to acquire, possess or use nuclear production facilities. The opinion set forth above is solely for the benefit of the addressees of this letter and may not be relied upon in any manner by any other person without my prior written consent, except that Winthrop, Stimson, Putnam & Roberts may rely on this opinion as to all matters of Iowa law in rendering their opinions required to be delivered under the Underwriting Agreement. Very truly yours, 7 EXHIBIT B [Letterhead of Winthrop, Stimson, Putnam & Roberts] [Date] Re: IES Utilities Inc. $__________ Collateral Trust Bonds ___% Series Due ____ Ladies and Gentlemen: We have acted as Counsel for IES Utilities Inc. ("Company") in connection with the issuance and sale by the Company to you pursuant to the Underwriting Agreement dated __________ ("Underwriting Agreement") between the Company and you, of $_________ in principal amount of Collateral Trust Bonds ___% Series Due ____ (the "Bonds"), issued under the Company's Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, to The First National Bank of Chicago, as Trustee (the "Trustee"), as heretofore supplemented and as further supplemented by the _____ Supplemental Indenture, dated as of __________. Said Indenture of Mortgage and Deed of Trust as so supplemented is herein referred to as the "Mortgage". We are members of the New York Bar and, for purposes of this opinion, do not hold ourselves out as experts on the laws of any jurisdiction other than the State of New York and the United States of America. We have, with your consent, relied upon the opinion of even date herewith addressed to you by __________, Counsel for IES Industries Inc., as to the matters covered in such opinion relating to Iowa law. We have reviewed said opinion and believe that it is satisfactory and that you and we are justified in relying thereon. We also examined such other documents and questions of law and satisfied ourselves as to such other matters as we have deemed necessary in order to enable us to express this opinion. We have not examined and are expressing no opinion or belief as to matters relating to the incorporation of the Company, titles to property of the Company, franchises of the Company, or the descriptions of properties in, the nature and the extent of the lien of, the absence of liens and encumbrances prior to the lien of, or the recordation of, the Mortgage, IELP 1940 Mortgage and ISU 1923 Mortgage (the terms "IELP 1940 Mortgage" and "ISU 1923 Mortgage" as used herein shall have the same meaning as those terms in the Mortgage). We also have not examined the Bonds, except a specimen thereof. As to various questions of fact material to this opinion, we have relied upon representations and certificates of officers and representatives of the Company and statements in the Registration Statement (the terms "Registration Statement" and "Prospectus," as used herein, have the same meanings as those words in the Underwriting Agreement). We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and other instruments as we have considered relevant and necessary as a basis for such opinion. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to the originals of the documents submitted to us as certified or photostatic copies. Subject to the foregoing and to the further exceptions and qualifications set forth below, we are of the opinion that: 1. The Mortgage has been duly and validly authorized by all necessary corporate action of the Company, has been duly executed, acknowledged and delivered by the Company and is a valid and legally binding instrument enforceable against the Company in accordance with its terms, except as limited by laws with respect to or affecting the remedies to enforce the security provided by the Mortgage, and by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 2. The Bonds have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 3. The summaries of the terms of the Mortgage, the Bonds, the Class "A" Bonds (as defined in the Mortgage), the IELP 1940 Mortgage and the ISU 1923 Mortgage contained in the Registration Statement and the Prospectus fairly describe in all material respects the provisions thereof required to be described by the registration statement form. 4. The Underwriting Agreement has been duly authorized, executed and delivered by the Company. 5. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by the Company of, any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company, the Mortgage, the IELP 1940 Mortgage, the ISU 1923 Mortgage, or, to the best of our knowledge, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound. 6. The Chief Accountant of the Federal Energy Regulatory Commission has authorized the issuance and sale of the Bonds, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Bonds to you pursuant to the Underwriting Agreement are in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Bonds pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act") or the Trust Indenture Act. 7. To the best of our knowledge, the Registration Statement is, at the date hereof, effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act; the Registration Statement, at the time of its effectiveness, and the Prospectus, at the time first filed with the Securities and Exchange Commission ("Commission") pursuant to Rule 424 under the Securities Act, complied as to form in all material respects with the requirements of the Securities Act and the Trust Indenture Act, and the applicable rules and regulations of the Commission thereunder (except that we express no opinion as to the financial statements or other financial or statistical data included or incorporated by reference therein or as to the Form T-1 filed as an exhibit to the Registration Statement). 8. The Company and IES Industries Inc. are currently exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. 9. To the best of our knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. In passing upon the forms of the Registration Statement and the Prospectus, we necessarily assume the correctness and completeness of the statements made by the Company and the information included or incorporated by reference in the Registration Statement and the Prospectus and take no responsibility therefor, except insofar as such statements relate to us and as set forth in paragraph 3 above. In connection with the preparation of the Registration Statement and the Prospectus, we have had discussions with certain of the Company's officers and representatives, with other counsel for the Company, with your counsel and with Arthur Andersen LLP, the independent certified public accountants who examined certain of the financial statements included or incorporated by reference in the Registration Statement. Our examination of the Registration Statement and the Prospectus and our discussions did not disclose to us any information that gives us reason to believe that the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the time first filed with the Commission pursuant to Rule 424 under the Securities Act and at the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. We do not express any opinion or belief as to the financial statements or other financial or statistical data included or incorporated by reference in the Registration Statement or the Prospectus or as to the statements contained in the Form T-1 filed as an exhibit to the Registration Statement. With respect to the opinions set forth in Paragraphs 1 and 2 above, we call your attention to the fact that the provisions of the Atomic Energy Act of 1954, as amended, and regulations promulgated thereunder impose certain licensing and other requirements upon persons (such as the Trustee, as defined in the Mortgage, or other purchasers pursuant to the remedial provisions of the Mortgage, the IELP 1940 Mortgage, and the ISU 1923 Mortgage) who seek to acquire, possess or use nuclear production facilities. As used in this opinion, the phrase "to the best of our knowledge" is intended to mean the actual knowledge or information known by the lawyers in our firm who have been principally involved in the transactions contemplated by the Underwriting Agreement. The opinion set forth above is solely for your benefit in connection with the Underwriting Agreement and the transactions contemplated thereunder and may not be quoted or furnished to, or relied upon in any manner by, any other person or utilized for any other purpose without our prior written consent. Very truly yours, WINTHROP, STIMSON, PUTNAM & ROBERTS 8 EXHIBIT C [Letterhead of Dorsey & Whitney LLP] [Date] Re: IES Utilities Inc. $__________ Collateral Trust Bonds ___% Series Due ____ Ladies and Gentlemen: We have acted as your counsel in connection with the issuance and sale by IES Utilities, Inc. (the "Company") to you pursuant to the Underwriting Agreement dated __________ ("Underwriting Agreement") between the Company and you, of $__________ in principal amount of Collateral Trust Bonds ___% Series (the "Bonds"), issued under the Company's Indenture, dated as of September 1, 1993, to The First National Bank of Chicago, as Trustee (the "Trustee"), as supplemented by the _____ Supplemental Indenture, dated as of __________. Said Indenture of Mortgage and Deed of Trust as so supplemented is herein referred to as the "Mortgage"). This opinion is being delivered pursuant to Section 8(d) of the Underwriting Agreement. We have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In rendering our opinions below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies or specimens. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or other) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or other), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to our opinions, we have relied on certificates of officers of the Company and of public officials. Certain of our opinions expressed below as to factual matters are qualified as being limited "to the best of our knowledge" or by other words to the same or similar effect. Such words, as used herein, mean the information known to ___________, ___________ and __________, the attorneys who have represented you in connection with the transactions contemplated by the Underwriting Agreement. In rendering such opinions, we have not conducted any independent investigation or consulted with other attorneys in our firm with respect to the matters covered thereby. On the basis of such examination, we advise you that, in our opinion: 1. The Company is a validly organized and existing corporation in good standing under the laws of the State of Iowa. 2. The Underwriting Agreement has been duly authorized, executed and delivered by the Company. 3. The Mortgage has been duly and validly authorized by all requisite corporate action, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms. 4. The Mortgage has been duly qualified under the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"). 5. The Bonds have been duly authorized by all requisite corporate action and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Mortgage. 6. The Chief Accountant of the Federal Energy Regulatory Commission has authorized the issuance and sale of the Bonds, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Bonds to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Bonds pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), or the Trust Indenture Act. 7. The Company's registration statements on Form S-3 (File Nos. 33-62259 and 333-_____) relating to the Bonds (collectively, the "Registration Statement") have become effective under the Securities Act, and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act. 8. The Company is a subsidiary of IES Industries Inc., an Iowa corporation, and both are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. The opinions set forth above are subject to the following qualifications and exceptions: (a) Our opinions are subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar law of general application affecting creditors' rights. (b) Our opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). (c) We express no opinion concerning any person's rights in or title to any real or personal property. We express no opinion with regard to the filing or recording of any agreement or instrument. We express no opinion with respect to the validity, perfection or priority of any lien or security interest. (d) The rights of debtors, guarantors and other secured parties to receive notices under Sections 9-504 and 9-505 of the Uniform Commercial Code ("UCC") may not be waived prior to default, the failure to comply with such notice requirements may bar or limit the recovery of any deficiency remaining after the retention or sale of repossessed collateral, and a secured party may be required to obtain, after appropriate notice and hearing, a judgment or decree of a court of competent jurisdiction permitting the secured party to enforce its rights to take possession and dispose of any of its collateral. (e) The rights of debtors, guarantors and other secured parties to redeem collateral under Section 9-506 of the UCC may not be waived prior to default. (f) The duties to exercise reasonable care in the custody and preservation of collateral in a secured party's possession and to deal with and dispose of collateral in a commercially reasonable manner as required by the UCC or other applicable law may not be disclaimed by agreement, waived or released prior to default. (g) Notwithstanding certain language of the Mortgage, the Trustee may be limited to recovery of only reasonable expenses or attorneys' fees and legal expenses with respect to the enforcement of the Mortgage and the liens or security interests created under the Mortgage. (h) We express no opinion as to the enforcement of indemnification provisions in the Mortgage. (i) Certain rights, remedies and waivers contained in the Mortgage may be limited or rendered ineffective by applicable laws governing such provisions, but such laws do not, in our opinion, render the Mortgage invalid as a whole, or invalidate the obligations created thereunder or the liens or security interests created thereby, and the Mortgage does contain the customary remedial provisions which are normally used to allow the practical realization of the rights and benefits afforded thereby. (j) The provisions of the Atomic Energy Act of 1954, as amended, and regulations promulgated thereunder, impose certain licensing and other requirements upon persons (such as the Trustee or other purchasers pursuant to the remedial provisions of the Mortgage) who seek to acquire, possess or use nuclear production facilities. Our opinions expressed above are limited to the laws of the States of Iowa and New York and the federal laws of the United States of America. The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without pour prior written consent. Very truly yours, DORSEY & WHITNEY LLP 9 [Letterhead of Dorsey & Whitney LLP] [Date] Re: IES Utilities Inc. $__________ Collateral Trust Bonds ___% Series Due ____ Ladies and Gentlemen: This letter relates to the registration under the Securities Act of 1933, as amended (the "Act"), and offering of $__________ in aggregate principal amount of Collateral Trust Bonds, ___% Series Due ____ (the "Bonds") of IES Utilities Inc., an Iowa corporation (the "Company"). The registration statements of the Company on Form S-3 (File Nos. 33-62259 and 333-_____) (collectively, the "Registration Statement") was filed in accordance with procedures of the Securities and Exchange Commission (the "Commission") permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a post-effective amendment or prospectus supplement that provides information relating to the terms of the securities and the manner of their distribution. The Bonds have been offered by the Prospectus dated __________ (the "Prospectus"), as supplemented by the Prospectus Supplement dated __________ (the "Prospectus Supplement"), which updates or supplements certain information contained in the Prospectus. The Prospectus, as so supplemented, does not necessarily contain a current description of the Company's business and affairs since, pursuant to form S-3, it incorporates by reference certain documents filed with the Commission which contain information as of various dates. In accordance with our understanding with you as to the scope of our services under the circumstances applicable to the offering of the Bonds, we reviewed the Registration Statement, the Prospectus and the Prospectus Supplement, participated in the discussions with your representatives and those of the Company, its counsel and its independent public accountants and advised you as to the requirements of the Act and the applicable rules and regulations thereunder. Between the date of the Prospectus Supplement and the date of delivery of this letter, we participated in further discussions with your representatives and those of the Company, its counsel and its independent public accountants regarding the contents of certain portions of the Prospectus and the Prospectus Supplement and certain related matters, and reviewed certificates of certain officers of the Company, opinions addressed to you from counsel to the Company and letters addressed to you from independent public accountants of the Company. On the basis of the information that was reviewed by us in the course of the performance of the services referred to above, in our opinion (i) the Registration Statement, as of its effective date, and the Prospectus, as supplemented by the Prospectus Supplement as of the date of the Prospectus Supplement, complied as to form in all material respects with the requirements of the Act and the Trust Indenture Act of 1939, as amended, and the respective, applicable rules and regulations thereunder (ii) the summaries of the terms of the Mortgage, the Bonds, the Class "A" Bonds, the 1940 Indenture and the ISU 1923 Indenture (as such terms are defined in the Prospectus) contained in the Registration Statement, the Prospectus and the Prospectus Supplement fairly describe in all material respects the provisions thereof required to be described in the registration statement form. Further, nothing that came to our attention in the course of such review has caused us to believe that the Registration Statement, on such effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement and as of the date and time of delivery of this letter, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the Prospectus Supplement. Also, we do not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement, the Prospectus or the Prospectus Supplement, or as to the statement of the eligibility and qualification of the Trustee under the Indenture under which the Bonds are being issued. This letter is furnished by us as counsel to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, DORSEY & WHITNEY LLP 10 EXHIBIT D Pursuant to subsection (e) of Section 8 of the Underwriting Agreement, Arthur Andersen LLP shall furnish a letter to the Representative to the effect that: (1) They are independent certified public accountants with respect to the Company within the meaning of the Securities Act and the applicable published rules and regulations thereunder; (2) In their opinion, the financial statements and schedules audited by them and included or incorporated by reference in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (3) On the basis of performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the latest available unaudited financial statements included or incorporated by reference in the Registration Statement, a reading of the latest available interim unaudited financial statements of the Company, the minutes of the meetings of the Board of Directors, the Executive Committee thereof and the stockholders of the Company, respectively, since the close of the most recent audited fiscal year to a specified date not more than five business days prior to the Closing Date, and inquiries of officials of the Company who have responsibility for the respective company's financial and accounting matters (it being understood that the foregoing procedures do not constitute an audit made in accordance with generally accepted auditing standards and that they would not necessarily reveal matters of significance with respect to the comments made in such letter, and, accordingly, that Arthur Andersen LLP makes no representation as to the sufficiency of such procedures for the several Underwriters' purposes), nothing has come to their attention which caused them to believe that (a) any unaudited financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (b) the audited and any unaudited selected financial information and supplemental financial information and ratios of earnings to fixed charges included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable disclosure requirements of Regulation S-K promulgated under the Securities Act; (c) any material modifications should be made to said unaudited financial statements for them to be in conformity with generally accepted accounting principles; (d) for the period from ___________ to the date of the latest available unaudited financial statements of the Company, there was any decrease in operating revenues, operating income or net income as compared with the corresponding period in the preceding year, except in all instances for decreases which the Prospectus discloses have occurred or may occur or except as set forth in such letter; and (e) at a specified date not more than ______ days prior to the Closing Date there was any change in the capital stock or long-term debt of the Company, in each case as compared with amounts shown in the most recent balance sheet incorporated by reference in the Prospectus, except in all instances for changes or decreases which the Prospectus discloses have occurred or may occur, for declarations of dividends, for the repayment or redemption of long-term debt, for the amortization of premium or discount on long-term debt, for the redemption or purchase of preferred stock for sinking fund purposes, for any increases in long-term debt in respect of previously issued pollution control revenue bonds, or for changes or decreases as set forth in such letter, identifying the same and specifying the amount thereof. (4) In addition to the audit referred to in their reports included or incorporated by reference in the Prospectus and the inspection of minute books, inquiries and other limited procedures referred to in paragraph 3 above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information including certain pro forma information specified by the Representative which are derived from the general accounting records of the Company which appear in the Prospectus (excluding documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representative or in documents incorporated by reference in the Prospectus specified by the Representative and agreed to by the Company, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and have found them to be in agreement. EX-1.B 3 PROPOSED FORM OF UNDERWRITING AGREEMENT 1 EXHIBIT 1(b) UNDERWRITING AGREEMENT For the Purchase of Subordinated Debentures of IES Utilities Inc. IES UTILITIES INC. c/o Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1490 SECTION 1. Purchase and Sale. On the basis of the representations and warranties, and subject to the terms and conditions, set forth in this agreement ("Underwriting Agreement"), each Underwriter (defined below) shall purchase from IES Utilities Inc. ("Company"), severally and not jointly, and the Company shall sell to each of the Underwriters (defined below), the principal amount of the Company's unsecured junior subordinated debentures ("Subordinated Debentures") set forth opposite the name of such Underwriter in Schedule II hereto at the price specified in Schedule I hereto, plus accrued interest, if any, at the rate specified in Schedule I hereto. The aggregate principal amount of such Subordinated Debentures being sold hereunder is hereinafter referred to as the "Debentures." SECTION 2. Underwriters and Representative. The term "Underwriters," as used herein, shall be deemed to mean the several persons, firms, or corporations named in Schedule II hereto (including any substituted Underwriters under the provisions of Section 6), and the term "Representative," as used herein, shall be deemed to mean the representative or representatives of such Underwriters by whom or on whose behalf this Underwriting Agreement is signed. If there shall be one person, firm, or corporation named in said Schedule II, the term "Underwriters" and the term "Representative," as used herein, shall mean that person, firm, or corporation. All obligations of the Underwriters are several and not joint. The use of the term "Underwriter" herein shall not be deemed to establish or admit that a purchaser of the Debentures is an "Underwriter" of the Debentures as such term is defined in and used under the Securities Act of 1933, as amended ("Securities Act"). SECTION 3. Description of the Debentures. The Debentures shall be in the aggregate principal amount and shall mature on the date specified in Schedule I hereto, and shall be issued under and secured by the Indenture (For Unsecured Subordinated Debt Securities) dated as of December 1, 1995 ("Indenture"), of the Company to The First National Bank of Chicago as Trustee ("Trustee"). The Debentures shall bear interest at the rate per annum specified in Schedule I hereto. The Debentures and the Indenture are more fully described in the Prospectus hereinafter referred to. SECTION 4. Representations and Warranties of the Company. The Company represents and warrants that: (a) It has filed with the Securities and Exchange Commission ("Commission") two registration statements (File Nos. 33-62259 and 333-_____) (collectively, the "Registration Statement") for the registration of up to an aggregate of $135,000,000 principal amount of the Company's debt securities under the Securities Act. Registration statements (File Nos. 33-62259 and 333-_____) have become effective. No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or threatened by the Commission. The prospectus (including the supplement thereto) forming a part of the Registration Statement, at that time pursuant to Item 12 of Form S-3, is hereinafter referred to as the "Basic Prospectus." In the event that the Basic Prospectus shall have been amended, revised, or supplemented (but excluding any amendments, revisions, or supplements to the Basic Prospectus relating solely to the offering of debt securities other than the Debentures) prior to the time of effectiveness of this Underwriting Agreement, and with respect to any documents filed by the Company pursuant to Section 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), after the time the Registration Statement initially became effective and up to the time of effectiveness of this Underwriting Agreement (but excluding documents incorporated therein by reference relating solely to the offering of debt securities other than the Debentures), which documents are deemed to be incorporated by reference in the Basic Prospectus, the term "Basic Prospectus" as used herein shall also mean such prospectus as so amended, revised, or supplemented. The Registration Statement as it initially became effective and as it may have been amended by any amendment thereto incorporated in the Basic Prospectus (including for these purposes as an amendment any document incorporated by reference in the Basic Prospectus) and the Basic Prospectus as it shall be supplemented to reflect the terms of offering and sale of the Debentures by a prospectus supplement ("Prospectus Supplement") to be filed with the Commission pursuant to Rule 424 under the Securities Act ("Rule 424"), are hereinafter referred to as the "Registration Statement" and the "Prospectus," respectively; (b) After the time of effectiveness of this Underwriting Agreement, the Company will not file (i) any amendment to the Registration Statement (except any amendment relating solely to the offering of debt securities other than the Debentures) or supplement to the Prospectus or (ii) prior to the time that the Prospectus is filed with the Commission pursuant to Rule 424, any document which is to be incorporated by reference in, or any supplement (including the Prospectus Supplement) to, the Basic Prospectus, in either case without prior notice to each of the Representative and Dorsey & Whitney LLP ("Counsel for the Underwriters"), or any such amendment, supplement, or document to which said Counsel shall reasonably object on legal grounds in writing. For purposes of this Underwriting Agreement, any document filed with the Commission after the effectiveness of this Underwriting Agreement and incorporated by reference in the Prospectus (except documents incorporated by reference relating solely to the offering of debt securities other than the Debentures) pursuant to Item 12 of Form S-3 shall be deemed a supplement to the Prospectus; (c) The Registration Statement, at the time of its effectiveness, fully complied, the Indenture, at the time of its execution, will fully comply, and the Prospectus, when filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may then be supplemented or amended, will fully comply, in all material respects with the applicable provisions of the Securities Act, the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"), and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations will be deemed to comply therewith; the documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, on the date first filed with the Commission pursuant to the Exchange Act, fully complied and on the date the Prospectus is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined) will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations were or will be deemed to comply therewith; on the date of effectiveness of the Registration Statement and any post-effective amendment thereto (but excluding in each case any post-effective amendment relating solely to the offering of debt securities other than the Debentures) or, if later than such dates, on the date that the Company's most recent annual report on Form 10-K was filed with the Commission under the Exchange Act, the Registration Statement, as amended by any such post-effective amendment, did not or will not, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, at the date it is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may be amended or supplemented, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and on said dates and at such times, the documents then incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, when read together with the Prospectus, or the Prospectus as it may then be amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this -------------- subsection (c) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter for use in connection with the preparation of the Registration Statement or the Prospectus, as they may be amended or supplemented, or to any statements in or omissions from the statement of eligibility, as it may be amended, under the Trust Indenture Act of the Trustee under the Indenture; (d) The Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures; such authorization is in full force and effect; the issuance and sale of the Debentures pursuant to this Underwriting Agreement will not violate the terms of such authorization; and no other authorization, approval or consent of any other governmental body or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to this Underwriting Agreement, except such as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under the state securities or "blue sky" laws in connection with the purchase and distribution of the Debentures by the Underwriters; (e) The Company is a corporation duly incorporated, and validly existing, and in good standing under the laws of the State of Iowa and has full power and authority (corporate and other) under such laws to own its properties and to conduct its business as described in the Registration Statement and the Prospectus; and the Company does not own or lease substantial properties or conduct its business in any state other than the State of Iowa; (f) The Debentures have been duly authorized, and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by and secured by the Indenture; the Indenture has been duly authorized, executed and delivered by the Company and the Trustee, and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, except in each case as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Debentures and the Indenture will conform in all material respects to the descriptions thereof in the Prospectus; and (g) The consummation by the Company of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Company's Articles of Incorporation or Bylaws, as amended, or of any indenture or other agreement or instrument to which the Company is now a party. SECTION 5. Offering. Forthwith upon the execution of this Underwriting Agreement, the Representative, acting on behalf of the Underwriters, shall advise the Company whether a public offering of the Debentures is to be made, and, if so, shall furnish to the Company (which information shall be confirmed in writing as soon as practicable thereafter) (a) the information with respect to such offering of the Debentures and related matters that is required to complete the Prospectus Supplement or any post-effective amendment to the Registration Statement which may be required and a copy of any "agreement among underwriters"; (b) if a post-effective amendment to the Registration Statement is required, a consent, if necessary, to the filing of the post-effective amendment or an acceptable power-of-attorney authorizing an available individual to sign the consent on its behalf; and (c) such further information, if any, as may be required to be furnished by the Company under the Federal Power Act. Such information and the power-of-attorney may be provided by telecopier (in the case of the power-of-attorney, followed promptly by an executed copy). Nothing in this Underwriting Agreement shall be construed to require that the Underwriters make any such public offering on a "fixed price" basis. The Representative agrees to notify the Company in writing of any change in the plan of distribution of the Debentures that would require a supplement to the Prospectus or an amendment to the Registration Statement. SECTION 6. Time and Place of Closing. Delivery of the Debentures and payment therefor by check or checks, payable to the Company or its order, in New York, New York, or by wire transfer, in immediately available funds, shall be made at the offices of Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York, at 10:00 A.M., New York time, on _____, or at such other place, time, and/or date as the Representative and the Company may agree upon in writing or as may be established in accordance with the following paragraph. The hour and date of such delivery and payment are herein called the "Closing Date." The Debentures shall be delivered to the Representative for the respective accounts of the Underwriters in registered form in such authorized denominations and registered in such names as the Representative may reasonably request in writing at least two business days prior to the Closing Date, or, to the extent not so requested, in the names of the respective Underwriters in such denominations as the Company shall determine. For the purpose of expediting the checking of the Debentures by the Representative, the Company agrees to make the Debentures available to the Representative for checking not later than 2:30 P.M., New York time, on the last business day preceding the Closing Date, at the New York office of The First National Bank of Chicago, or at such other place, time, and/or date as may be agreed upon between the Company and the Representative. If any Underwriter shall fail or refuse (otherwise than for some reason sufficient to justify, in accordance with the terms hereof, the cancellation or termination of its obligations hereunder) to purchase and pay for the principal amount of Debentures that it has agreed to purchase and pay for hereunder, the Company shall immediately give notice to the Representative of the default of such Underwriter, and the other Underwriters shall have the right within twenty-four (24) hours after the receipt of such notice by the Representative to determine to purchase, or to procure one or more others, who are members of the National Association of Securities Dealers, Inc. ("NASD") (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), and satisfactory to the Company, to purchase, upon the terms herein set forth, the principal amount of Debentures that the defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter or Underwriters shall determine to exercise such right, the Representative shall give written notice to the Company of such determination within twenty-four (24) hours after it shall have received notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. If in the event of such a default the Representative shall fail to give such notice, or shall within such twenty-four (24) hour period give written notice to the Company that no other Underwriter or Underwriters, or others, will exercise such right, then this Underwriting Agreement may be terminated by the Company, upon like notice given to the Representative, within a further period of twenty-four (24) hours. If in such case the Company shall not elect to terminate this Underwriting Agreement, it shall have the right, irrespective of such default: (a) to require such non-defaulting Underwriters to purchase and pay for the respective principal amounts of Debentures that they had severally agreed to purchase hereunder, as hereinabove provided, and, in addition, the principal amount of Debentures that the defaulting Underwriter shall have so failed to purchase up to a principal amount thereof equal to one-ninth (1/9th) of the respective principal amounts of Debentures that such non-defaulting Underwriters have otherwise agreed to purchase hereunder, and/or (b) to procure one or more others, who are members of the NASD (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), to purchase, upon the terms herein set forth, the principal amount of Debentures that such defaulting Underwriter had agreed to purchase, or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a). In the event the Company shall exercise its rights under clause (a) and/or (b) above, the Company shall give written notice thereof to the Representative within such further period of twenty-four (24) hours, and, thereupon, the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. In the event the Company shall be entitled to but shall not elect to exercise its rights under clause (a) and/or (b), the Company shall be deemed to have elected to terminate this Underwriting Agreement. Any action taken by the Company under this Section 6 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement. Termination by the Company under this Section 6 shall be without any liability on the part of the Company or any non-defaulting Underwriter, except as otherwise provided in subsection (g) of Section 7. In the computation of any period of twenty-four (24) hours referred to in this Section 6, there shall be excluded a period of twenty-four (24) hours in respect of each Saturday, Sunday, or legal holiday which would otherwise be included in such period of time. SECTION 7. Covenants of the Company. The Company agrees with each of the Underwriters: (a) To deliver to the Representative a signed copy of the Registration Statement as originally filed and of all amendments thereto relating to the Debentures or a conformed copy thereof certified by an officer of the Company to be in the form filed. (b) To deliver to the Underwriters, through the Representative, prior to 10:00 A.M. New York time on the business day after the date on which this Underwriting Agreement becomes effective as many copies of the Prospectus as the Representative may reasonably request. (c) To cause the Prospectus to be filed with the Commission pursuant to and in compliance with Rule 424, and to advise the Representative promptly of the issuance of any stop order under the Securities Act with respect to the Registration Statement or the institution of any proceedings therefor of which the Company shall have received notice. The Company will use its best efforts to prevent the issuance of any such stop order and to secure the prompt removal thereof if issued. (d) During such period of time (not exceeding nine months) after the Prospectus has been filed with the Commission pursuant to Rule 424 as the Underwriters are required by law to deliver a prospectus, if any event relating to or affecting the Company or of which the Company shall be advised in writing by the Representative shall occur which in the Company's opinion should be set forth in a supplement or amendment to the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Debentures, not misleading, to notify the Representative of such event and to amend or supplement the Prospectus by either (i) preparing and filing with the Commission and furnishing to the Representative at the Company's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus or (ii) making an appropriate filing pursuant to Section 13, 14, or 15(d) of the Exchange Act, which will supplement or amend the Prospectus so that, as supplemented or amended, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Debentures, not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then the Underwriters shall assume the expense of preparing any such amendment or supplement. In case any Underwriter is required to deliver a prospectus after the expiration of nine months from the date the Prospectus is filed with the Commission pursuant to Rule 424, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus or supplements or amendments to the Prospectus complying with Section 10(a) of the Securities Act. (e) During such period of time after the date the Prospectus is filed with the Commission pursuant to Rule 424 as a prospectus relating to the Debentures is required to be delivered under the Securities Act, to file promptly all documents required to be filed with the Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act. (f) To make generally available to the Company's security holders as soon as practicable an earning statement (which need not be audited) in reasonable detail covering a period of at least twelve months beginning after the "effective date of the registration statement" within the meaning of Rule 158 under the Securities Act, which earning statement shall be in such form, and be made generally available to security holders in such a manner, as to comply with the requirements of Section 11(a) of the Securities Act and Rule 158 promulgated under the Securities Act. (g) Except as herein otherwise provided, to pay all expenses and taxes (except transfer taxes) in connection with (i) the preparation and filing of the Registration Statement and any amendments thereto, (ii) the issuance, printing, and delivery of the Debentures, (iii) any fees charged by securities rating services for rating the Debentures and (iv) the typing, printing, and delivery to the Underwriters, through the Representative, of reasonable quantities of copies of the Registration Statement and the Prospectus, and any amendment or supplement thereto, except as otherwise provided in paragraph (d) of this Section. The Company shall not, however, be required to pay any amount for any expenses of the Representative or any of the Underwriters, except that, if this Underwriting Agreement shall be terminated in accordance with the provisions of Section 8, 9, or 11, the Company will reimburse the Representative for (i) the reasonable fees and disbursements of counsel for the Underwriters, whose fees and disbursements the Underwriters agree to pay in any other event, and (ii) their reasonable out-of-pocket expenses, in an amount not exceeding a total of ten thousand dollars ($10,000), incurred in contemplation of the performance of this Underwriting Agreement. The Company shall not in any event be liable to any of the Underwriters for damages on account of loss of anticipated profits. (h) Not to sell any additional Subordinated Debentures until the earlier to occur of (i) the Closing Date or (ii) in the case of an initial public offering at a fixed price by the Underwriters, the date of the termination of the fixed price offering restrictions applicable to the Underwriters. The Representative agrees to notify the Company of such termination if it occurs prior to the Closing Date. SECTION 8. Conditions of Underwriters' Obligations. The obligation of the Underwriters to purchase and pay for the Debentures shall be subject to the accuracy of the representations and warranties made herein on the part of the Company and to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and at the Closing Date the Representative shall have received a certificate, dated the Closing Date and signed by an officer of the Company, to the effect that no such stop order has been or is in effect and that no proceedings for such purpose are pending before, or to the knowledge of the Company threatened by, the Commission. (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Debentures shall be in full force and effect; (d) At the Closing Date, the Representative shall have received from ___________, counsel for IES Industries Inc., Winthrop, Stimson, Putnam & Roberts, counsel to the Company, and Dorsey & Whitney LLP, counsel for the Underwriters, opinions in substantially the form and substance set forth in Exhibits A, B, and C hereto, respectively, (i) with such changes therein as may be agreed upon by the Company and the Representative, with the approval of Counsel for the Underwriters, and (ii) if the Prospectus relating to the Debentures shall be supplemented after the Prospectus shall have been filed with the Commission pursuant to Rule 424, with changes therein to reflect such supplementation. (e) On the Closing Date, the Representative shall have received from Arthur Andersen LLP a letter dated the Closing Date, in substantially the form and substance set forth in Exhibit D hereto. (f) At the Closing Date, the Representative shall have received a certificate of the Company dated the Closing Date and signed by a Vice President of the Company, to the effect that (i) the Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures and such authorization is in full force and effect, to the best knowledge of the signer; (ii) since the most recent date as of which information is given in the Prospectus, as it may have been amended or supplemented, there has not been any material adverse change in the business, property, or financial condition of the Company and there has not been any material transaction entered into by the Company, other than transactions in the ordinary course of business, in each case other than as referred to in, or contemplated by, the Prospectus, as it may have been amended or supplemented; and (iii) to the best knowledge of the signer, the representations and warranties of the Company in this Underwriting Agreement are true and correct in all material respects at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date. (g) All legal proceedings to be taken in connection with the issuance and sale of the Debentures shall have been satisfactory in form and substance to Counsel for the Underwriters. If any of the conditions specified in this Section 8 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the principal amount of the Debentures, upon notice thereof to the Company. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 9. Conditions of Company's Obligations. The obligations of the Company hereunder shall be subject to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date. (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Debentures shall be in full force and effect. In case any of the conditions specified in this Section 9 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Company upon notice thereof to the Representative. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 10. Indemnification. (a) The Company shall indemnify, defend, and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law. The Company shall reimburse each such Underwriter and controlling person for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a preliminary prospectus (if used prior to the initial effective date of the Registration Statement), or in the Basic Prospectus (if used prior to the date that the Prospectus is filed with the Commission pursuant to Rule 424) or in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been made), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading; provided, however, that the indemnity agreement contained in this paragraph shall not apply to any such losses, claims, damages, liabilities, expenses, or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement which shall constitute the statement of eligibility under the Trust Indenture Act of the Trustee under the Indenture; and provided further, that the indemnity agreement contained in this paragraph shall not inure to the benefit of any Underwriter or of any person controlling any Underwriter on account of any such losses, claims, damages, liabilities, expenses, or actions arising from the sale of the Debentures to any person if there shall not have been given or sent to such person on behalf of such Underwriter (i) with or prior to the written confirmation of the sale to such person a copy of the Prospectus, as then amended or supplemented (exclusive for this purpose of any amendment or supplement relating solely to any offering of debt securities other than the Debentures and of any document which becomes incorporated by reference pursuant to Item 12 of Form S-3 more than 3 business days prior to the date hereof), and (ii) as soon as available after such written confirmation a copy of any amendment or supplement to the Prospectus (exclusive for this purpose of any document incorporated by reference pursuant to Item 12 of Form S-3) which the Company shall thereafter furnish, pursuant to subsection (d) of Section 7 hereof, relating to an event occurring prior to the payment for and delivery to such person of the Debentures involved in such sale. The indemnity agreement of the Company contained in this Section and the representations and warranties of the Company contained in Section 4 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any such controlling person, and shall survive the delivery of the Debentures. (b) Each Underwriter shall indemnify, defend, and hold harmless the Company, its directors and officers, and each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law and shall reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any action, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of such Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof. The indemnity agreement of the respective Underwriters contained in this paragraph shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company, its directors or officers, or any such controlling person, and shall survive the delivery of the Debentures. (c) The Company and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder, but the omission so to notify the indemnifying party or parties of any such action shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, the indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of the action, in which event the defense shall be conducted by counsel chosen by such indemnifying party or parties and satisfactory to the indemnified party or parties who shall be a defendant or defendants in the action, and the indemnified defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of the action, the indemnifying party will reimburse the indemnified party or parties for the reasonable fees and expenses of any counsel retained by the indemnified party or parties. If the indemnifying party does not employ counsel to take charge of the defense or if counsel for the indemnified party reasonably concludes that there may be defenses available to the indemnified party which are different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to assume the defense on behalf of the indemnified party), legal expenses (limited to those of one counsel for all indemnified parties) and other expenses reasonably incurred by the indemnified party will be paid by the indemnifying party. No party will be liable with respect to any settlement made without its prior written consent. (d) If the indemnification provided for in this Section 10 is unavailable to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statements of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statements or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Debentures underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The respective obligations of the Company and the Underwriters under this Section 10 shall be in addition to any liability which each of them may otherwise have. SECTION 11. Termination. This Underwriting Agreement may be terminated at any time prior to the Closing Date by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the aggregate principal amount of the Debentures, if, prior to such time, (i) trading in securities on the New York Stock Exchange shall have been generally suspended, (ii) minimum or maximum ranges for prices shall have been generally established on the New York Stock Exchange by the New York Stock Exchange, the Commission, or other governmental authority, (iii) a general banking moratorium shall have been declared by federal or New York State authorities, (iv) an outbreak or escalation of hostilities or other national or international calamity or crisis occurs, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Representative, to make it impracticable to market the Debentures or enforce contracts for the sale of the Debentures or (v) in the reasonable judgment of the Representative, the subject matter of any amendment or supplement (prepared by the Company) to the Basic Prospectus, the Registration Statement or the Prospectus (except for information relating to the public offering of the Debentures or to the activity of any Underwriter or Underwriters) filed or issued after the effectiveness of this Underwriting Agreement by the Company shall have materially impaired the marketability of the Debentures. Any termination hereof pursuant to this Section 11 shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 12. Applicable Law. This Underwriting Agreement and the Debentures to be sold hereunder shall be New York contracts, and their validity and interpretation shall be governed by the laws of the State of New York. SECTION 13. Successors. This Underwriting Agreement shall inure to the benefit of the Company, the Underwriters and, with respect to the provisions of Section 10, each director, officer, and controlling person referred to in Section 10, and their respective successors. Nothing herein is intended or shall be construed to give to any other person, firm, or corporation any legal or equitable right, remedy, or claim under or in respect of any provision in this Underwriting Agreement. The term "successor" as used in this Underwriting Agreement shall not include any purchaser, as such purchaser, of any of the Debentures from any of the Underwriters. SECTION 14. Notices. All communications hereunder shall be in writing and, if to the Underwriters, shall be mailed or delivered to the Representative at the address set forth below, or, if to the Company, shall be mailed or delivered to it c/o IES Utilities Inc., 200 First Street, S.E., Cedar Rapids, Iowa 52401 Attention: Treasurer. SECTION 15. Counterparts. This Underwriting Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of such counterparts, when so executed and delivered, shall be deemed to be an original, and all of such counterparts shall, taken together, constitute one and the same agreement. ----------- The stated interest rate to be borne by the Debentures and the price to be paid to the Company therefor (stated as a percentage of the principal amount of the Debentures), in each case are set forth in Schedule I hereto. If said interest rate and price and this Underwriting Agreement are in accordance with your understanding of our agreement, please indicate your acceptance thereof in the space provided below for that purpose; whereupon, this letter and your acceptance shall constitute a binding agreement between the Company and the several Underwriters in accordance with its terms. Very truly yours, As Representative(s) of the Underwriters By: ------------------------------------ Name: Title: Address of Representative(s): ----------------------------- ----------------------------- The foregoing Underwriting Agreement is hereby accepted as of the date set forth below: IES UTILITIES INC. By: ----------------------- Name: Title: Date: 2 SCHEDULE I Underwriting Agreement dated ____________ Registration Statements (Nos. 33-62259 and 333-____________) Securities: Designation: Principal Amount: Date of Maturity: Interest Rate: ___% Commencement of Interest Accrual: Purchase Price: ______% Public Offering Price: ______% Closing Date: 3 SCHEDULE II Principal Amount Name of Underwriter of Debentures - - ------------------- ---------------- Total ========== 4 EXHIBIT A [Letterhead of IES Industries Inc.] [Date] Re: __% Subordinated Debentures, Series ___ $ Due Ladies and Gentlemen: I am counsel for IES Industries Inc., the parent company of IES Utilities Inc. (the "Company") and have participated in the issuance and sale by the Company to you of $ aggregate principal amount of __% Subordinated Debentures, Series ___ due _____________ (the "Debentures"), issued under the Company's Indenture (For Unsecured Subordinated Debt Securities), dated as of December 1, 1995, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture") pursuant to an Underwriting Agreement dated as of ________ between you and the Company (the "Underwriting Agreement"). In this connection, I have examined, among other things, the following: (a) the Registration Statement and the Prospectus (such terms having the same meanings herein as in the Underwriting Agreement); (b) the Articles of Incorporation of the Company and all amendments thereto, as certified by the Secretary of State of the State of Iowa; (c) a Certificate of the Secretary of State or other appropriate state official certifying as to the good standing and qualification of the Company to transact business in the State of Iowa; (d) the By-laws of the Company, certified by the Secretary of the Company; (e) the Indenture; (f) resolution of the Board of Directors of the Company [pertaining to the authorization and sale of the Debentures and related matters]; (g) the Application filed by the Company with the Federal Energy Regulatory Commission seeking, among other things, authority for and approval of the issuance and sale of Debentures and a copy of the Letter of Authority issued by the Chief Accountant of such Commission, dated __________, authorizing and approving the issuance and sale of the Debentures; (h) certified copies of the Officer's Certificate of the Company dated __________, setting forth the terms and conditions of the Debentures approved by the __________ of the Company. (i) counterparts of the Underwriting Agreement executed by you and the Company; and (j) other information, documents, and material which I deem sufficient along with the foregoing to support this opinion. In addition, in connection with this opinion, I have reviewed various orders and certificates of, and members of the legal staff of IES Industries Inc. had telephone conversations with, public officials. I have not examined the Debentures, except a specimen thereof. 5 Subject to the foregoing and to the further exceptions and qualifications set forth below and having regard to all legal and factual considerations which I deem relevant and based upon all such other information and documents furnished to or obtained by me as I believe necessary to enable me to render this opinion, including certificates of public officials, I am of the opinion that: 1. The Company has been duly incorporated and is validly existing and in good standing as a corporation under the laws of the State of Iowa, with full power and authority (corporate and other) to own its property and to conduct its business as presently being conducted all within the State of Iowa. 2. The Debentures and the Indenture conform in all material respects to the descriptions thereof in the Prospectus. 3. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company. 4. The Debentures have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture, enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether or not enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 5. The Indenture has been duly and validly authorized by all necessary corporate action of the Company, has been duly executed, acknowledged and delivered by the Company and is a valid and legally binding instrument enforceable against the Company in accordance with its terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 6. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by, the Company of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company or the Indenture, or to the best of my knowledge after reasonable investigation, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound, including the Agreement and Plan of Merger, by and among, WPL Holdings, Inc., IES Industries Inc., Interstate Power Company (a Delaware corporation), WPLH Acquisition Co., and Interstate Power Company (a Wisconsin corporation), dated as of November 10, 1995, as amended. 7. The Chief Accountant of the Federal Energy Regulatory Commission ("FERC") has authorized the issuance and sale of the Debentures, which authorization is, to the best of my knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other governmental body is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), and such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Debentures by you. 8. The Company has the legal right to function and operate as an electric and gas utility in the state of Iowa, holds valid and subsisting franchises authorizing it to carry on the utility business in which it is engaged in all incorporated communities having a population of 1,000 or more (except in ____, which operations have not been impaired by the lack ofsuch franchises), and has adaquate licenses and permits where required by law to maintain electric and gas transmission and distribution lines through unincorporated areas and over public lands not located in incorporated communities and over private rights-of-way in the territory which it serves. 9. Except as referred to in the Registration Statement and Prospectus, to the best of my knowledge, there are no material or contemplated legal proceedings to which the Company is or may be a party or of which property of the Company is or may be subject which depart from the ordinary routine litigation incident to the kinds of business conducted by the Company. 10. The documents incorporated by reference in the Prospectus (other than the financial statements and financial and statistical data, as to which I express no opinion), when they were filed with the Securities and Exchange Commission (the "Commission"), complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder of the Commission; and I have no reason to believe that any of such documents, when they were so filed, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading. 11. To the best of my knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. I am a member of the bar of the State of Iowa and do not hold myself out as an expert on the laws of any other State. The opinion set forth above is solely for the benefit of the addressees of this letter and may not be relied upon in any manner by any other person without my prior written consent, except that Winthrop, Stimson, Putnam & Roberts may rely on this opinion as to all matters of Iowa law in rendering their opinions required to be delivered under the Underwriting Agreement. Very truly yours, 6 EXHIBIT B [Letterhead of Winthrop, Stimson, Putnam & Roberts] [Date] Re: IES Utilities Inc. $ % Subordinated Debentures, Series Due Ladies and Gentlemen: We have acted as Counsel for IES Utilities Inc. ("Company") in connection with the issuance and sale by the Company to you pursuant to the Underwriting Agreement dated _________, ("Underwriting Agreement") between the Company and you, of $ in principal amount of % Subordinated Debentures, Series __ (the "Debentures"), issued under the Company's Indenture dated as of December 1, 1995, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture"). We are members of the New York Bar and, for purposes of this opinion, do not hold ourselves out as experts on the laws of any jurisdiction other than the State of New York and the United States of America. We have, with your consent, relied upon the opinion of even date herewith addressed to you by __________, Counsel for IES Industries Inc., as to the matters covered in such opinion relating to Iowa law. We have reviewed said opinion and believe that it is satisfactory and that you and we are justified in relying thereon. We also examined such other documents and questions of law and satisfied ourselves as to such other matters as we have deemed necessary in order to enable us to express this opinion. We have not examined and are expressing no opinion or belief as to matters relating to the incorporation of the Company. We also have not examined the Debentures, except a specimen thereof. As to various questions of fact material to this opinion, we have relied upon representations and certificates of officers and representatives of the Company and statements in the Registration Statement (the terms "Registration Statement" and "Prospectus," as used herein, have the same meanings as those words in the Underwriting Agreement). We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and other instruments, as we have considered relevant and necessary as a basis for such opinion. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to the originals of the documents submitted to us as certified or photostatic copies. 7 Subject to the foregoing and to the further exceptions and qualifications set forth below, we are of the opinion that: 1. The Indenture has been duly and validly authorized by all necessary corporate action of the Company, has been duly executed, acknowledged and delivered by the Company and is a valid and legally binding instrument enforceable against the Company in accordance with its terms except as limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 2. The Debentures have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 3. The summaries of the terms of the Indenture and the Debentures contained in the Registration Statement and the Prospectus fairly describe in all material respects the provisions thereof required to be described by the registration statement form. 4. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company. 5. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by, the Company of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company or to the best of our knowledge, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound. As used in this paragraph 5, the phrase "to the best of our knowledge after reasonable investigation" is intended to mean the actual knowledge or information known by the lawyers in our firm who have been principally involved in the transactions contemplated by the Underwriting Agreement. 6. The Chief Accountant of the Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act") or the Trust Indenture Act. 7. To the best of our knowledge, the Registration Statement is, at the date hereof, effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act; the Registration Statement, at the time of its effectiveness, and the Prospectus, at the time first filed with the Securities and Exchange Commission ("Commission") pursuant to Rule 424 under the Securities Act, complied as to form in all material respects with the requirements of the Securities Act and the Trust Indenture Act, and the applicable rules and regulations of the Commission thereunder (except that we express no opinion as to the financial statements or other financial or statistical data included or incorporated by reference therein or as to the Form T-1 filed as an exhibit to the Registration Statement). 8. The Company and IES Industries Inc. are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. 9. To the best of our knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. In passing upon the forms of the Registration Statement and the Prospectus, we necessarily assume the correctness and completeness of the statements made by the Company and the information included or incorporated by reference in the Registration Statement and the Prospectus and take no responsibility therefor, except insofar as such statements relate to us and as set forth in paragraph 3 above. In connection with the preparation of the Registration Statement and the Prospectus, we have had discussions with certain of the Company's officers and representatives, with other counsel for the Company, with your counsel and with Arthur Andersen LLP, the independent certified public accountants who examined certain of the financial statements included or incorporated by reference in the Registration Statement. Our examination of the Registration Statement and the Prospectus and our discussions did not disclose to us any information that gives us reason to believe that the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the time first filed with the Commission pursuant to Rule 424 under the Securities Act and at the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. We do not express any opinion or belief as to the financial statements or other financial or statistical data included or incorporated by reference in the Registration Statement or the Prospectus. We do not express any opinion as to the statements contained in the Form T-1 filed as an exhibit to the Registration Statement. The opinion set forth above is solely for the benefit of the addressees hereof in connection with the Underwriting Agreement and the transactions contemplated thereunder and may not be quoted or furnished to, or relied upon in any manner by, any other person or utilized for any other purpose without our prior written consent. Very truly yours, WINTHROP, STIMSON, PUTNAM & ROBERTS 8 EXHIBIT C [Letterhead of Dorsey & Whitney LLP] [Date] Re: IES Utilities Inc. $ % Subordinated Debentures, Series Ladies and Gentlemen: We have acted as your counsel in connection with the issuance and sale by IES Utilities, Inc. (the "Company") to you pursuant to the Underwriting Agreement dated , ("Underwriting Agreement") between the Company and you, of $___________ in principal amount of % Subordinated Debentures, Series ___ (the "Debentures"), issued under the Company's Indenture, dated as of December 1, 1995, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture"). This opinion is being delivered pursuant to subsection (d) of Section 8 of the Underwriting Agreement. We have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In rendering our opinions below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies or specimens. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or other) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or other), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to our opinions, we have relied on certificates of officers of the Company and of public officials. Certain of our opinions expressed below as to factual matters are qualified as being limited "to the best of our knowledge" or by other words to the same or similar effect. Such words, as used herein, mean the information known to ___________, ___________ and __________, the attorneys who have represented you in connection with the transactions contemplated by the Underwriting Agreement. In rendering such opinions, we have not conducted any independent investigation or consulted with other attorneys in our firm with respect to the matters covered thereby. On the basis of such examination, we adivse you that, in our opinion: 9 1. the Company is a validly organized and existing corporation in good standing under the laws of the State of Iowa; 2. the Underwriting Agreement has been duly authorized, executed and delivered by the Company; 3. the Indenture has been duly and validly authorized by all requisite corporate action of the Company, and has been duly executed and delivered by the Company and (assuming the Indenture has been duly authorized, executed and delivered by the Trustee) consititues a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; 4. the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"); 5. the Debentures have been duly authorized and executed by the Company and, when authenticated by the Trustee in accordance with the terms of the Indenture, and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and binding obligations of the Company entitled to the benefits and security provided by the Indenture, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; 6. the Chief Accountant of the FERC has authorized the issuance and sale of the Debentures, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), or the Trust Indenture Act; 7. the Company's registration statements on Form S-3 (File Nos. 33-62259 and 333-_____) relating to the Debentures (collectively, the "Registration Statement") have become effective under the Securities Act, and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act; and 8. the Company is a subsidiary of IES Industries Inc., an Iowa corporation, and both are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. Our opinions expressed above are limited to the laws of the States of Iowa and New York and the federal laws of the United States of America. The opinion set forth above is solely for the benefit of the addressees of this letter and may not be relied upon in any manner by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, DORSEY & WHITNEY LLP 10 [Letterhead of Dorsey & Whitney LLP] [Date] Re: IES Utilities Inc. $ % Subordinated Debentures, Series Ladies and Gentlemen: This letter relates to the registration under the Securities Act of 1933, as amended (the "Act"), and offering of $__________ in aggregate principal amount of ___% Subordinated Debentures, Series ____ (the "Debentures") of IES Utilities Inc., an Iowa corporation (the "Company"). The registration statements of the Company on Form S-3 (File Nos. 33-62259 and 333-_____) (collectively, the "Registration Statement") was filed in accordance with procedures of the Securities and Exchange Commission (the "Commission") permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a post-effective amendment or prospectus supplement that provides information relating to the terms of the securities and the manner of their distribution. The Debentures have been offered by the Prospectus dated __________ (the "Prospectus"), as supplemented by the Prospectus Supplement dated __________ (the "Prospectus Supplement"), which updates or supplements certain information contained in the Prospectus. The Prospectus, as so supplemented, does not necessarily contain a current description of the Company's business and affairs since, pursuant to form S-3, it incorporates by reference certain documents filed with the Commission which contain information as of various dates. In accordance with our understanding with you as to the scope of our services under the circumstances applicable to the offering of the Debentures, we reviewed the Registration Statement, the Prospectus and the Prospectus Supplement, participated in the discussions with your representatives and those of the Company, its counsel and its independent public accountants and advised you as to the requirements of the Act and the applicable rules and regulations thereunder. Between the date of the Prospectus Supplement and the date of delivery of this letter, we participated in further discussions with your representatives and those of the Company, its counsel and its independent public accountants regarding the contents of certain portions of the Prospectus and the Prospectus Supplement and certain related matters, and reviewed certificates of certain officers of the Company, opinions addressed to you from counsel to the Company and letters addressed to you from independent public accountants of the Company. On the basis of the information that was reviewed by us in the course of the performance of the services referred to above, in our opinion (i) the Registration Statement, as of its effective date, and the Prospectus, as supplemented by the Prospectus Supplement as of the date of the Prospectus Supplement, complied as to form in all material respects with the requirements of the Act and the Trust Indenture Act of 1939, as amended, and the respective, applicable rules and regulations thereunder (except that we express no opinion as to financial statements and financial or statistical data contained therein or as to the Form T-1 filed as an Exhibit to the Registration Statement) (ii) the summaries of the terms of the Indenture (as such term is defined in the Prospectus) and the Debentures contained in the Registration Statement, the Prospectus and the Prospectus Supplement fairly describe in all material respects the provisions thereof required to be described in the Registration Statement. Further, nothing that came to our attention in the course of such review has caused us to believe that the Registration Statement, on such effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement and as of the date and time of delivery of this letter, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the Prospectus Supplement. Also, we do not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement, the Prospectus or the Prospectus Supplement, or as to the statement of the eligibility and qualification of the Trustee under the Indenture under which the Debentures are being issued. This letter is furnished by us as counsel to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, DORSEY & WHITNEY LLP 11 EXHIBIT D Pursuant to subsection (e) of Section 8 of the Underwriting Agreement, Arthur Andersen LLP shall furnish a letter to the Representative to the effect that: (1) They are independent certified public accountants with respect to the Company within the meaning of the Securities Act and the applicable published rules and regulations thereunder; (2) In their opinion, the financial statements and schedules audited by them and included or incorporated by reference in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (3) On the basis of performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the latest available unaudited financial statements included or incorporated by reference in the Registration Statement, a reading of the latest available interim unaudited financial statements of the Company, the minutes of the meetings of the Board of Directors, the Executive Committee thereof and the stockholders of the Company, respectively, since the close of the most recent audited fiscal year to a specified date not more than five business days prior to the Closing Date, and inquiries of officials of the Company who have responsibility for the respective company's financial and accounting matters (it being understood that the foregoing procedures do not constitute an audit made in accordance with generally accepted auditing standards and that they would not necessarily reveal matters of significance with respect to the comments made in such letter, and, accordingly, that Arthur Andersen LLP makes no representation as to the sufficiency of such procedures for the several Underwriters' purposes), nothing has come to their attention which caused them to believe that (a) the unaudited financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (b) the audited and unaudited selected financial information and supplemental financial information and ratios of earnings to fixed charges included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable disclosure requirements of Regulation S-K promulgated under the Securities Act; (c) any material modifications should be made to said unaudited financial statements for them to be in conformity with generally accepted accounting principles; (d) for the period from ___________ to the date of the latest available unaudited financial statements of the Company, there was any decrease in operating revenues, operating income or net income as compared with the corresponding period in the preceding year, except in all instances for decreases which the Prospectus discloses have occurred or may occur or except as set forth in such letter; and (e) at a specified date not more than _____ days prior to the Closing Date there was any change in the capital stock or long-term debt of the Company, in each case as compared with amounts shown in the most recent balance sheet incorporated by reference in the Prospectus, except in all instances for changes or decreases which the Prospectus discloses have occurred or may occur, for declarations of dividends, for the repayment or redemption of long-term debt, for the amortization of premium or discount on long-term debt, for the redemption or purchase of preferred stock for sinking fund purposes, for any increases in long-term debt in respect of previously issued pollution control revenue bonds, or for changes or decreases as set forth in such letter, identifying the same and specifying the amount thereof. (4) In addition to the audit referred to in their reports included or incorporated by reference in the Prospectus and the inspection of minute books, inquiries and other limited procedures referred to in paragraph 3 above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information including certain pro forma information specified by the Representative which are derived from the general accounting records of the Company which appear in the Prospectus (excluding documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representative or in documents incorporated by reference in the Prospectus specified by the Representative and agreed to by the Company, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and have found them to be in agreement. EX-1.C 4 PROPOSED FORM OF UNDERWRITING AGREEMENT 1 EXHIBIT 1(c) UNDERWRITING AGREEMENT For the Purchase of Senior Debentures of IES Utilities Inc. IES UTILITIES INC. c/o Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1490 SECTION 1. Purchase and Sale. On the basis of the representations and warranties, and subject to the terms and conditions, set forth in this agreement ("Underwriting Agreement"), each Underwriter (defined below) shall purchase from IES Utilities Inc. ("Company"), severally and not jointly, and the Company shall sell to each of the Underwriters (defined below), the principal amount of the Company's senior unsecured debentures ("Senior Debentures") set forth opposite the name of such Underwriter in Schedule II hereto at the price specified in Schedule I hereto, plus accrued interest, if any, at the rate specified in Schedule I hereto. The aggregate principal amount of such Senior Debentures being sold hereunder is hereinafter referred to as the "Debentures." SECTION 2. Underwriters and Representative. The term "Underwriters," as used herein, shall be deemed to mean the several persons, firms, or corporations named in Schedule II hereto (including any substituted Underwriters under the provisions of Section 6), and the term "Representative," as used herein, shall be deemed to mean the representative or representatives of such Underwriters by whom or on whose behalf this Underwriting Agreement is signed. If there shall be one person, firm, or corporation named in said Schedule II, the term "Underwriters" and the term "Representative," as used herein, shall mean that person, firm, or corporation. All obligations of the Underwriters are several and not joint. The use of the term "Underwriter" herein shall not be deemed to establish or admit that a purchaser of the Debentures is an "Underwriter" of the Debentures as such term is defined in and used under the Securities Act of 1933, as amended ("Securities Act"). SECTION 3. Description of the Debentures. The Debentures shall be in the aggregate principal amount and shall mature on the date specified in Schedule I hereto, and shall be issued under and secured by the Indenture (For Senior Unsecured Debt Securities) dated as of _______, 1997 ("Indenture"), of the Company to The First National Bank of Chicago as Trustee ("Trustee"). The Debentures shall bear interest at the rate per annum specified in Schedule I hereto. The Debentures and the Indenture are more fully described in the Prospectus hereinafter referred to. SECTION 4. Representations and Warranties of the Company. The Company represents and warrants that: (a) It has filed with the Securities and Exchange Commission ("Commission") two registration statements (File Nos. 33-62259 and 333-29391) (collectively, the "Registration Statement") for the registration of up to an aggregate of $135,000,000 principal amount of the Company's debt securities under the Securities Act. Registration statements (File Nos. 33-62259 and 333-29391) have become effective. No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or threatened by the Commission. The prospectus (including the supplement thereto) forming a part of the Registration Statement, at that time pursuant to Item 12 of Form S-3, is hereinafter referred to as the "Basic Prospectus." In the event that the Basic Prospectus shall have been amended, revised, or supplemented (but excluding any amendments, revisions, or supplements to the Basic 2 Prospectus relating solely to the offering of debt securities other than the Debentures) prior to the time of effectiveness of this Underwriting Agreement, and with respect to any documents filed by the Company pursuant to Section 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), after the time the Registration Statement initially became effective and up to the time of effectiveness of this Underwriting Agreement (but excluding documents incorporated therein by reference relating solely to the offering of debt securities other than the Debentures), which documents are deemed to be incorporated by reference in the Basic Prospectus, the term "Basic Prospectus" as used herein shall also mean such prospectus as so amended, revised, or supplemented. The Registration Statement as it initially became effective and as it may have been amended by any amendment thereto incorporated in the Basic Prospectus (including for these purposes as an amendment any document incorporated by reference in the Basic Prospectus) and the Basic Prospectus as it shall be supplemented to reflect the terms of offering and sale of the Debentures by a prospectus supplement ("Prospectus Supplement") to be filed with the Commission pursuant to Rule 424 under the Securities Act ("Rule 424"), are hereinafter referred to as the "Registration Statement" and the "Prospectus," respectively; (b) After the time of effectiveness of this Underwriting Agreement, the Company will not file (i) any amendment to the Registration Statement (except any amendment relating solely to the offering of debt securities other than the Debentures) or supplement to the Prospectus or (ii) prior to the time that the Prospectus is filed with the Commission pursuant to Rule 424, any document which is to be incorporated by reference in, or any supplement (including the Prospectus Supplement) to, the Basic Prospectus, in either case without prior notice to each of the Representative and Dorsey & Whitney LLP ("Counsel for the Underwriters"), or any such amendment, supplement, or document to which said Counsel shall reasonably object on legal grounds in writing. For purposes of this Underwriting Agreement, any document filed with the Commission after the effectiveness of this Underwriting Agreement and incorporated by reference in the Prospectus (except documents incorporated by reference relating solely to the offering of debt securities other than the Debentures) pursuant to Item 12 of Form S-3 shall be deemed a supplement to the Prospectus; (c) The Registration Statement, at the time of its effectiveness, fully complied, the Indenture, at the time of its execution, will fully comply, and the Prospectus, when filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may then be supplemented or amended, will fully comply, in all material respects with the applicable provisions of the Securities Act, the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"), and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations will be deemed to comply therewith; the documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, on the date first filed with the Commission pursuant to the Exchange Act, fully complied and on the date the Prospectus is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined) will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations of the Commission thereunder or pursuant to said rules and regulations were or will be deemed to comply therewith; on the date of effectiveness of the Registration Statement and any post-effective amendment thereto (but excluding in each case any post-effective amendment relating solely to the offering of debt securities other than the Debentures) or, if later than such dates, on the date that the Company's most recent annual report on Form 10-K was filed with the Commission under the Exchange Act, the Registration Statement, as amended by any such post-effective amendment, did not or will not, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, at the date it is filed with the Commission pursuant to Rule 424 and at the Closing Date (hereinafter defined), as it may be amended or supplemented, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and on said dates and at such times, the documents then - 2 - 3 incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, when read together with the Prospectus, or the Prospectus as it may then be amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subsection (c) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter for use in connection with the preparation of the Registration Statement or the Prospectus, as they may be amended or supplemented, or to any statements in or omissions from the statement of eligibility, as it may be amended, under the Trust Indenture Act of the Trustee under the Indenture; (d) The Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures; such authorization is in full force and effect; the issuance and sale of the Debentures pursuant to this Underwriting Agreement will not violate the terms of such authorization; and no other authorization, approval or consent of any other governmental body or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to this Underwriting Agreement, except such as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under the state securities or "blue sky" laws in connection with the purchase and distribution of the Debentures by the Underwriters; (e) The Company is a corporation duly incorporated, and validly existing, and in good standing under the laws of the State of Iowa and has full power and authority (corporate and other) under such laws to own its properties and to conduct its business as described in the Registration Statement and the Prospectus; and the Company does not own or lease substantial properties or conduct its business in any state other than the State of Iowa; (f) The Debentures have been duly authorized, and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by and secured by the Indenture; the Indenture has been duly authorized, executed and delivered by the Company and the Trustee, and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, except in each case as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Debentures and the Indenture will conform in all material respects to the descriptions thereof in the Prospectus; and (g) The consummation by the Company of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Company's Articles of Incorporation or Bylaws, as amended, or of any indenture or other agreement or instrument to which the Company is now a party. SECTION 5. Offering. Forthwith upon the execution of this Underwriting Agreement, the Representative, acting on behalf of the Underwriters, shall advise the Company whether a public offering of the Debentures is to be made, and, if so, shall furnish to the Company (which information shall be confirmed in writing as soon as practicable thereafter) (a) the information with respect to such offering of the Debentures and related matters that is required to complete the Prospectus Supplement or any post-effective amendment to the Registration Statement which may be required and a copy of any "agreement among underwriters"; (b) if a post-effective amendment to the Registration Statement is required, a consent, if necessary, to the filing of the post-effective amendment or an acceptable power-of-attorney authorizing an available individual to sign the consent on its behalf; and (c) such further information, if any, as may be required to be furnished by the Company under the Federal Power Act. Such information and the power-of-attorney may be provided by telecopier (in the case of the power- - 3 - 4 of-attorney, followed promptly by an executed copy). Nothing in this Underwriting Agreement shall be construed to require that the Underwriters make any such public offering on a "fixed price" basis. The Representative agrees to notify the Company in writing of any change in the plan of distribution of the Debentures that would require a supplement to the Prospectus or an amendment to the Registration Statement. SECTION 6. Time and Place of Closing. Delivery of the Debentures and payment therefor by check or checks, payable to the Company or its order, in New York, New York, or by wire transfer, in immediately available funds, shall be made at the offices of Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York, at 10:00 A.M., New York time, on _____, or at such other place, time, and/or date as the Representative and the Company may agree upon in writing or as may be established in accordance with the following paragraph. The hour and date of such delivery and payment are herein called the "Closing Date." The Debentures shall be delivered to the Representative for the respective accounts of the Underwriters in registered form in such authorized denominations and registered in such names as the Representative may reasonably request in writing at least two business days prior to the Closing Date, or, to the extent not so requested, in the names of the respective Underwriters in such denominations as the Company shall determine. For the purpose of expediting the checking of the Debentures by the Representative, the Company agrees to make the Debentures available to the Representative for checking not later than 2:30 P.M., New York time, on the last business day preceding the Closing Date, at the New York office of The First National Bank of Chicago, or at such other place, time, and/or date as may be agreed upon between the Company and the Representative. If any Underwriter shall fail or refuse (otherwise than for some reason sufficient to justify, in accordance with the terms hereof, the cancellation or termination of its obligations hereunder) to purchase and pay for the principal amount of Debentures that it has agreed to purchase and pay for hereunder, the Company shall immediately give notice to the Representative of the default of such Underwriter, and the other Underwriters shall have the right within twenty-four (24) hours after the receipt of such notice by the Representative to determine to purchase, or to procure one or more others, who are members of the National Association of Securities Dealers, Inc. ("NASD") (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), and satisfactory to the Company, to purchase, upon the terms herein set forth, the principal amount of Debentures that the defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter or Underwriters shall determine to exercise such right, the Representative shall give written notice to the Company of such determination within twenty-four (24) hours after it shall have received notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. If in the event of such a default the Representative shall fail to give such notice, or shall within such twenty-four (24) hour period give written notice to the Company that no other Underwriter or Underwriters, or others, will exercise such right, then this Underwriting Agreement may be terminated by the Company, upon like notice given to the Representative, within a further period of twenty-four (24) hours. If in such case the Company shall not elect to terminate this Underwriting Agreement, it shall have the right, irrespective of such default: (a) to require such non-defaulting Underwriters to purchase and pay for the respective principal amounts of Debentures that they had severally agreed to purchase hereunder, as hereinabove provided, and, in addition, the principal amount of Debentures that the defaulting Underwriter shall have so failed to purchase up to a principal amount thereof equal to one-ninth (1/9th) of the respective principal amounts of Debentures that such non-defaulting Underwriters have otherwise agreed to purchase hereunder, and/or (b) to procure one or more others, who are members of the NASD (or, if not members of the NASD, who are foreign banks, dealers, or institutions not registered under the Exchange Act and who agree in making sales to comply with the NASD's Rules of Fair Practice), to purchase, upon the terms herein set forth, the principal amount of Debentures that such - 4 - 5 defaulting Underwriter had agreed to purchase, or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a). In the event the Company shall exercise its rights under clause (a) and/or (b) above, the Company shall give written notice thereof to the Representative within such further period of twenty-four (24) hours, and, thereupon, the Closing Date shall be postponed for such period, not exceeding three business days, as the Company shall determine. In the event the Company shall be entitled to but shall not elect to exercise its rights under clause (a) and/or (b), the Company shall be deemed to have elected to terminate this Underwriting Agreement. Any action taken by the Company under this Section 6 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement. Termination by the Company under this Section 6 shall be without any liability on the part of the Company or any non-defaulting Underwriter, except as otherwise provided in subsection (g) of Section 7. In the computation of any period of twenty-four (24) hours referred to in this Section 6, there shall be excluded a period of twenty-four (24) hours in respect of each Saturday, Sunday, or legal holiday which would otherwise be included in such period of time. SECTION 7. Covenants of the Company. The Company agrees with each of the Underwriters: (a) To deliver to the Representative a signed copy of the Registration Statement as originally filed and of all amendments thereto relating to the Debentures or a conformed copy thereof certified by an officer of the Company to be in the form filed. (b) To deliver to the Underwriters, through the Representative, prior to 10:00 A.M. New York time on the business day after the date on which this Underwriting Agreement becomes effective as many copies of the Prospectus as the Representative may reasonably request. (c) To cause the Prospectus to be filed with the Commission pursuant to and in compliance with Rule 424, and to advise the Representative promptly of the issuance of any stop order under the Securities Act with respect to the Registration Statement or the institution of any proceedings therefor of which the Company shall have received notice. The Company will use its best efforts to prevent the issuance of any such stop order and to secure the prompt removal thereof if issued. (d) During such period of time (not exceeding nine months) after the Prospectus has been filed with the Commission pursuant to Rule 424 as the Underwriters are required by law to deliver a prospectus, if any event relating to or affecting the Company or of which the Company shall be advised in writing by the Representative shall occur which in the Company's opinion should be set forth in a supplement or amendment to the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Debentures, not misleading, to notify the Representative of such event and to amend or supplement the Prospectus by either (i) preparing and filing with the Commission and furnishing to the Representative at the Company's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus or (ii) making an appropriate filing pursuant to Section 13, 14, or 15(d) of the Exchange Act, which will supplement or amend the Prospectus so that, as supplemented or amended, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser of the Debentures, not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then the Underwriters shall assume the expense of preparing any such amendment or supplement. In case any Underwriter is required to deliver a prospectus after the expiration of nine months from the date the Prospectus is filed with the Commission pursuant to Rule 424, the Company, upon the request of the - 5 - 6 Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus or supplements or amendments to the Prospectus complying with Section 10(a) of the Securities Act. (e) During such period of time after the date the Prospectus is filed with the Commission pursuant to Rule 424 as a prospectus relating to the Debentures is required to be delivered under the Securities Act, to file promptly all documents required to be filed with the Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act. (f) To make generally available to the Company's security holders as soon as practicable an earning statement (which need not be audited) in reasonable detail covering a period of at least twelve months beginning after the "effective date of the registration statement" within the meaning of Rule 158 under the Securities Act, which earning statement shall be in such form, and be made generally available to security holders in such a manner, as to comply with the requirements of Section 11(a) of the Securities Act and Rule 158 promulgated under the Securities Act. (g) Except as herein otherwise provided, to pay all expenses and taxes (except transfer taxes) in connection with (i) the preparation and filing of the Registration Statement and any amendments thereto, (ii) the issuance, printing, and delivery of the Debentures, (iii) any fees charged by securities rating services for rating the Debentures and (iv) the typing, printing, and delivery to the Underwriters, through the Representative, of reasonable quantities of copies of the Registration Statement and the Prospectus, and any amendment or supplement thereto, except as otherwise provided in paragraph (d) of this Section. The Company shall not, however, be required to pay any amount for any expenses of the Representative or any of the Underwriters, except that, if this Underwriting Agreement shall be terminated in accordance with the provisions of Section 8, 9, or 11, the Company will reimburse the Representative for (i) the reasonable fees and disbursements of counsel for the Underwriters, whose fees and disbursements the Underwriters agree to pay in any other event, and (ii) their reasonable out-of-pocket expenses, in an amount not exceeding a total of ten thousand dollars ($10,000), incurred in contemplation of the performance of this Underwriting Agreement. The Company shall not in any event be liable to any of the Underwriters for damages on account of loss of anticipated profits. (h) Not to sell any additional Senior Debentures until the earlier to occur of (i) the Closing Date or (ii) in the case of an initial public offering at a fixed price by the Underwriters, the date of the termination of the fixed price offering restrictions applicable to the Underwriters. The Representative agrees to notify the Company of such termination if it occurs prior to the Closing Date. SECTION 8. Conditions of Underwriters' Obligations. The obligation of the Underwriters to purchase and pay for the Debentures shall be subject to the accuracy of the representations and warranties made herein on the part of the Company and to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and at the Closing Date the Representative shall have received a certificate, dated the Closing Date and signed by an officer of the Company, to the effect that no such stop order has been or is in effect and that no proceedings for such purpose are pending before, or to the knowledge of the Company threatened by, the Commission. - 6 - 7 (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Debentures shall be in full force and effect; (d) At the Closing Date, the Representative shall have received from ___________, counsel for IES Industries Inc., Winthrop, Stimson, Putnam & Roberts, counsel to the Company, and Dorsey & Whitney LLP, counsel for the Underwriters, opinions in substantially the form and substance set forth in Exhibits A, B, and C hereto, respectively, (i) with such changes therein as may be agreed upon by the Company and the Representative, with the approval of Counsel for the Underwriters, and (ii) if the Prospectus relating to the Debentures shall be supplemented after the Prospectus shall have been filed with the Commission pursuant to Rule 424, with changes therein to reflect such supplementation. (e) On the Closing Date, the Representative shall have received from Arthur Andersen LLP a letter dated the Closing Date, in substantially the form and substance set forth in Exhibit D hereto. (f) At the Closing Date, the Representative shall have received a certificate of the Company dated the Closing Date and signed by a Vice President of the Company, to the effect that (i) the Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures and such authorization is in full force and effect, to the best knowledge of the signer; (ii) since the most recent date as of which information is given in the Prospectus, as it may have been amended or supplemented, there has not been any material adverse change in the business, property, or financial condition of the Company and there has not been any material transaction entered into by the Company, other than transactions in the ordinary course of business, in each case other than as referred to in, or contemplated by, the Prospectus, as it may have been amended or supplemented; and (iii) to the best knowledge of the signer, the representations and warranties of the Company in this Underwriting Agreement are true and correct in all material respects at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date. (g) All legal proceedings to be taken in connection with the issuance and sale of the Debentures shall have been satisfactory in form and substance to Counsel for the Underwriters. If any of the conditions specified in this Section 8 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the principal amount of the Debentures, upon notice thereof to the Company. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 9. Conditions of Company's Obligations. The obligations of the Company hereunder shall be subject to the following conditions: (a) The Prospectus shall have been filed with the Commission pursuant to and in compliance with Rule 424. (b) No stop order suspending the effectiveness of the Registration Statement shall be in effect at or prior to the Closing Date, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date. (c) The authorization by the Federal Energy Regulatory Commission of the issuance and sale of the Debentures shall be in full force and effect. - 7 - 8 In case any of the conditions specified in this Section 9 shall not have been fulfilled, this Underwriting Agreement may be terminated by the Company upon notice thereof to the Representative. Any such termination shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 10. Indemnification. (a) The Company shall indemnify, defend, and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law. The Company shall reimburse each such Underwriter and controlling person for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a preliminary prospectus (if used prior to the initial effective date of the Registration Statement), or in the Basic Prospectus (if used prior to the date that the Prospectus is filed with the Commission pursuant to Rule 424) or in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been made), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading; provided, however, that the indemnity agreement contained in this paragraph shall not apply to any such losses, claims, damages, liabilities, expenses, or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of any Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement which shall constitute the statement of eligibility under the Trust Indenture Act of the Trustee under the Indenture; and provided further, that the indemnity agreement contained in this paragraph shall not inure to the benefit of any Underwriter or of any person controlling any Underwriter on account of any such losses, claims, damages, liabilities, expenses, or actions arising from the sale of the Debentures to any person if there shall not have been given or sent to such person on behalf of such Underwriter (i) with or prior to the written confirmation of the sale to such person a copy of the Prospectus, as then amended or supplemented (exclusive for this purpose of any amendment or supplement relating solely to any offering of debt securities other than the Debentures and of any document which becomes incorporated by reference pursuant to Item 12 of Form S-3 more than 3 business days prior to the date hereof), and (ii) as soon as available after such written confirmation a copy of any amendment or supplement to the Prospectus (exclusive for this purpose of any document incorporated by reference pursuant to Item 12 of Form S-3) which the Company shall thereafter furnish, pursuant to subsection (d) of Section 7 hereof, relating to an event occurring prior to the payment for and delivery to such person of the Debentures involved in such sale. The indemnity agreement of the Company contained in this Section and the representations and warranties of the Company contained in Section 4 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any such controlling person, and shall survive the delivery of the Debentures. (b) Each Underwriter shall indemnify, defend, and hold harmless the Company, its directors and officers, and each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages, or liabilities, joint or several, to which they or any of them may become subject under the Securities - 8 - 9 Act or any other statute or common law and shall reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, such reimbursement to be made as such expenses are incurred by them, in connection with investigating any such losses, claims, damages, or liabilities or in connection with defending any action, insofar as such losses, claims, damages, liabilities, expenses, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or through the Representative on behalf of such Underwriter expressly for use in connection with the preparation of the Registration Statement or the Prospectus or any amendment or supplement to either thereof. The indemnity agreement of the respective Underwriters contained in this paragraph shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company, its directors or officers, or any such controlling person, and shall survive the delivery of the Debentures. (c) The Company and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder, but the omission so to notify the indemnifying party or parties of any such action shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, the indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of the action, in which event the defense shall be conducted by counsel chosen by such indemnifying party or parties and satisfactory to the indemnified party or parties who shall be a defendant or defendants in the action, and the indemnified defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of the action, the indemnifying party will reimburse the indemnified party or parties for the reasonable fees and expenses of any counsel retained by the indemnified party or parties. If the indemnifying party does not employ counsel to take charge of the defense or if counsel for the indemnified party reasonably concludes that there may be defenses available to the indemnified party which are different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to assume the defense on behalf of the indemnified party), legal expenses (limited to those of one counsel for all indemnified parties) and other expenses reasonably incurred by the indemnified party will be paid by the indemnifying party. No party will be liable with respect to any settlement made without its prior written consent. (d) If the indemnification provided for in this Section 10 is unavailable to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statements of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct - 9 - 10 or prevent such statements or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Debentures underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The respective obligations of the Company and the Underwriters under this Section 10 shall be in addition to any liability which each of them may otherwise have. SECTION 11. Termination. This Underwriting Agreement may be terminated at any time prior to the Closing Date by the Representative with the consent of the Underwriters, who may include the Representative, which have agreed to purchase in the aggregate fifty percent (50%) or more of the aggregate principal amount of the Debentures, if, prior to such time, (i) trading in securities on the New York Stock Exchange shall have been generally suspended, (ii) minimum or maximum ranges for prices shall have been generally established on the New York Stock Exchange by the New York Stock Exchange, the Commission, or other governmental authority, (iii) a general banking moratorium shall have been declared by federal or New York State authorities, (iv) an outbreak or escalation of hostilities or other national or international calamity or crisis occurs, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Representative, to make it impracticable to market the Debentures or enforce contracts for the sale of the Debentures or (v) in the reasonable judgment of the Representative, the subject matter of any amendment or supplement (prepared by the Company) to the Basic Prospectus, the Registration Statement or the Prospectus (except for information relating to the public offering of the Debentures or to the activity of any Underwriter or Underwriters) filed or issued after the effectiveness of this Underwriting Agreement by the Company shall have materially impaired the marketability of the Debentures. Any termination hereof pursuant to this Section 11 shall be without liability of any party to any other party, except as otherwise provided in subsection (g) of Section 7. SECTION 12. Applicable Law. This Underwriting Agreement and the Debentures to be sold hereunder shall be New York contracts, and their validity and interpretation shall be governed by the laws of the State of New York. SECTION 13. Successors. This Underwriting Agreement shall inure to the benefit of the Company, the Underwriters and, with respect to the provisions of Section 10, each director, officer, and controlling person referred to in Section 10, and their respective successors. Nothing herein is intended or shall be construed to give to any other person, firm, or corporation any legal or equitable right, remedy, or claim under or in respect of any provision in this Underwriting Agreement. The term "successor" as used in this Underwriting Agreement shall not include any purchaser, as such purchaser, of any of the Debentures from any of the Underwriters. SECTION 14. Notices. All communications hereunder shall be in writing and, if to the Underwriters, shall be mailed or delivered to the Representative at the address set forth below, or, if to the Company, shall be mailed or delivered to it c/o IES Utilities Inc., 200 First Street, S.E., Cedar Rapids, Iowa 52401 Attention: Treasurer. - 10 - 11 SECTION 15. Counterparts. This Underwriting Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of such counterparts, when so executed and delivered, shall be deemed to be an original, and all of such counterparts shall, taken together, constitute one and the same agreement. ----------- The stated interest rate to be borne by the Debentures and the price to be paid to the Company therefor (stated as a percentage of the principal amount of the Debentures), in each case are set forth in Schedule I hereto. If said interest rate and price and this Underwriting Agreement are in accordance with your understanding of our agreement, please indicate your acceptance thereof in the space provided below for that purpose; whereupon, this letter and your acceptance shall constitute a binding agreement between the Company and the several Underwriters in accordance with its terms. Very truly yours, As Representative(s) of the Underwriters By: ------------------------------------ Name: Title: Address of Representative(s): ---------------------------- ---------------------------- The foregoing Underwriting Agreement is hereby accepted as of the date set forth below: IES UTILITIES INC. By: ---------------------------- Name: Title: Date: - 11 - 12 SCHEDULE I Underwriting Agreement dated ____________ Registration Statements (Nos. 33-62259 and 333-____________) Securities: Designation: Principal Amount: Date of Maturity: Interest Rate: ___% Commencement of Interest Accrual: Purchase Price: ______% Public Offering Price: ______% Closing Date: 13 SCHEDULE II
Principal Amount Name of Underwriter of Debentures - ------------------- ---------------- Total =========
14 EXHIBIT A [Letterhead of IES Industries Inc.] [Date] RE: __% SENIOR DEBENTURES, SERIES ___ $_______________ DUE_____________ Ladies and Gentlemen: I am counsel for IES Industries Inc., the parent company of IES Utilities Inc. (the "Company") and have participated in the issuance and sale by the Company to you of $________ aggregate principal amount of __% Senior Debentures, Series ___ due _____________ (the "Debentures"), issued under the Company's Indenture (For Senior Unsecured Debt Securities), dated as of ______, 1997, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture") pursuant to an Underwriting Agreement dated as of ________ between you and the Company (the "Underwriting Agreement"). In this connection, I have examined, among other things, the following: (a) the Registration Statement and the Prospectus (such terms having the same meanings herein as in the Underwriting Agreement); (b) the Articles of Incorporation of the Company and all amendments thereto, as certified by the Secretary of State of the State of Iowa; (c) a Certificate of the Secretary of State or other appropriate state official certifying as to the good standing and qualification of the Company to transact business in the State of Iowa; (d) the By-laws of the Company, certified by the Secretary of the Company; (e) the Indenture; (f) resolution of the Board of Directors of the Company [pertaining to the authorization and sale of the Debentures and related matters]; (g) the Application filed by the Company with the Federal Energy Regulatory Commission seeking, among other things, authority for and approval of the issuance and sale of Debentures and a copy of the Letter of Authority issued by the Chief Accountant of such Commission, dated __________, authorizing and approving the issuance and sale of the Debentures; (h) certified copies of the Officer's Certificate of the Company dated __________, setting forth the terms and conditions of the Debentures approved by the __________ of the Company. (i) counterparts of the Underwriting Agreement executed by you and the Company; and (j) other information, documents, and material which I deem sufficient along with the foregoing to support this opinion. In addition, in connection with this opinion, I have reviewed various orders and certificates of, and members of the legal staff of IES Industries Inc. had telephone conversations with, public officials. I have not examined the Debentures, except a specimen thereof. A - 1 15 Subject to the foregoing and to the further exceptions and qualifications set forth below and having regard to all legal and factual considerations which I deem relevant and based upon all such other information and documents furnished to or obtained by me as I believe necessary to enable me to render this opinion, including certificates of public officials, I am of the opinion that: 1. The Company has been duly incorporated and is validly existing and in good standing as a corporation under the laws of the State of Iowa, with full power and authority (corporate and other) to own its property and to conduct its business as presently being conducted all within the State of Iowa. 2. The Debentures and the Indenture conform in all material respects to the descriptions thereof in the Prospectus. 3. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company. 4. The Debentures have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture, enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether or not enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 5. The Indenture has been duly and validly authorized by all necessary corporate action of the Company, has been duly executed, acknowledged and delivered by the Company and is a valid and legally binding instrument enforceable against the Company in accordance with its terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 6. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by, the Company of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company or the Indenture, or to the best of my knowledge after reasonable investigation, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound, including the Agreement and Plan of Merger, by and among, WPL Holdings, Inc., IES Industries Inc., Interstate Power Company (a Delaware corporation), WPLH Acquisition Co., and Interstate Power Company (a Wisconsin corporation), dated as of November 10, 1995, as amended. 7. The Chief Accountant of the Federal Energy Regulatory Commission ("FERC") has authorized the issuance and sale of the Debentures, which authorization is, to the best of my knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other governmental body is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), and such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Debentures by you. 8. The Company has the legal right to function and operate as an electric and gas utility in the state of Iowa, holds valid and subsisting franchises authorizing it to carry on the utility business in which it is A - 2 16 engaged in all incorporated communities having a population of 1,000 or more (except in ____, which operations have not been impaired by the lack of such franchises), and has adequate licenses and permits where required by law to maintain electric and gas transmission and distribution lines through unincorporated areas and over public lands not located in incorporated communities and over private rights-of-way in the territory which it serves. 9. Except as referred to in the Registration Statement and Prospectus, to the best of my knowledge, there are no material or contemplated legal proceedings to which the Company is or may be a party or of which property of the Company is or may be subject which depart from the ordinary routine litigation incident to the kinds of business conducted by the Company. 10. The documents incorporated by reference in the Prospectus (other than the financial statements and financial and statistical data, as to which I express no opinion), when they were filed with the Securities and Exchange Commission (the "Commission"), complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder of the Commission; and I have no reason to believe that any of such documents, when they were so filed, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading. 11. To the best of my knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. I am a member of the bar of the State of Iowa and do not hold myself out as an expert on the laws of any other State. The opinion set forth above is solely for the benefit of the addressees of this letter and may not be relied upon in any manner by any other person without my prior written consent, except that Winthrop, Stimson, Putnam & Roberts may rely on this opinion as to all matters of Iowa law in rendering their opinions required to be delivered under the Underwriting Agreement. Very truly yours, A - 3 17 EXHIBIT B [Letterhead of Winthrop, Stimson, Putnam & Roberts] [Date] RE: IES UTILITIES INC. $________% SENIOR DEBENTURES, SERIES ______ DUE _______ Ladies and Gentlemen: We have acted as Counsel for IES Utilities Inc. ("Company") in connection with the issuance and sale by the Company to you pursuant to the Underwriting Agreement dated _________, ("Underwriting Agreement") between the Company and you, of $_________ in principal amount of __% Senior Debentures, Series __ (the "Debentures"), issued under the Company's Indenture dated as of _________, 1997, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture"). We are members of the New York Bar and, for purposes of this opinion, do not hold ourselves out as experts on the laws of any jurisdiction other than the State of New York and the United States of America. We have, with your consent, relied upon the opinion of even date herewith addressed to you by __________, Counsel for IES Industries Inc., as to the matters covered in such opinion relating to Iowa law. We have reviewed said opinion and believe that it is satisfactory and that you and we are justified in relying thereon. We also examined such other documents and questions of law and satisfied ourselves as to such other matters as we have deemed necessary in order to enable us to express this opinion. We have not examined and are expressing no opinion or belief as to matters relating to the incorporation of the Company. We also have not examined the Debentures, except a specimen thereof. As to various questions of fact material to this opinion, we have relied upon representations and certificates of officers and representatives of the Company and statements in the Registration Statement (the terms "Registration Statement" and "Prospectus," as used herein, have the same meanings as those words in the Underwriting Agreement). We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and other instruments, as we have considered relevant and necessary as a basis for such opinion. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to the originals of the documents submitted to us as certified or photostatic copies. Subject to the foregoing and to the further exceptions and qualifications set forth below, we are of the opinion that: 1. The Indenture has been duly and validly authorized by all necessary corporate action of the Company, has been duly executed, acknowledged and delivered by the Company and is a valid and legally binding instrument enforceable against the Company in accordance with its terms except as limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; and the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). B - 1 18 2. The Debentures have been duly authorized and, when duly executed, authenticated, issued and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture enforceable against the Company in accordance with their terms except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 3. The summaries of the terms of the Indenture and the Debentures contained in the Registration Statement and the Prospectus fairly describe in all material respects the provisions thereof required to be described by the registration statement form. 4. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company. 5. The execution and delivery of the Underwriting Agreement, the consummation of the transactions therein contemplated and the fulfillment of the terms thereof do not and will not conflict with, or result in a breach by, the Company of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company or to the best of our knowledge, any other indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties are bound. As used in this paragraph 5, the phrase "to the best of our knowledge after reasonable investigation" is intended to mean the actual knowledge or information known by the lawyers in our firm who have been principally involved in the transactions contemplated by the Underwriting Agreement. 6. The Chief Accountant of the Federal Energy Regulatory Commission has authorized the issuance and sale of the Debentures, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act") or the Trust Indenture Act. 7. To the best of our knowledge, the Registration Statement is, at the date hereof, effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act; the Registration Statement, at the time of its effectiveness, and the Prospectus, at the time first filed with the Securities and Exchange Commission ("Commission") pursuant to Rule 424 under the Securities Act, complied as to form in all material respects with the requirements of the Securities Act and the Trust Indenture Act, and the applicable rules and regulations of the Commission thereunder (except that we express no opinion as to the financial statements or other financial or statistical data included or incorporated by reference therein or as to the Form T-1 filed as an exhibit to the Registration Statement). 8. The Company and IES Industries Inc. are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. 9. To the best of our knowledge, there are no contracts or other instruments or documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. In passing upon the forms of the Registration Statement and the Prospectus, we necessarily assume the correctness and completeness of the statements made by the Company and the information included or incorporated by reference in the Registration Statement and the Prospectus and take no responsibility therefor, B - 2 19 except insofar as such statements relate to us and as set forth in paragraph 3 above. In connection with the preparation of the Registration Statement and the Prospectus, we have had discussions with certain of the Company's officers and representatives, with other counsel for the Company, with your counsel and with Arthur Andersen LLP, the independent certified public accountants who examined certain of the financial statements included or incorporated by reference in the Registration Statement. Our examination of the Registration Statement and the Prospectus and our discussions did not disclose to us any information that gives us reason to believe that the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the time first filed with the Commission pursuant to Rule 424 under the Securities Act and at the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. We do not express any opinion or belief as to the financial statements or other financial or statistical data included or incorporated by reference in the Registration Statement or the Prospectus. We do not express any opinion as to the statements contained in the Form T-1 filed as an exhibit to the Registration Statement. The opinion set forth above is solely for the benefit of the addressees hereof in connection with the Underwriting Agreement and the transactions contemplated thereunder and may not be quoted or furnished to, or relied upon in any manner by, any other person or utilized for any other purpose without our prior written consent. Very truly yours, WINTHROP, STIMSON, PUTNAM & ROBERTS B - 3 20 EXHIBIT C [Letterhead of Dorsey & Whitney LLP] [Date] RE: IES UTILITIES INC. $_____________% SENIOR DEBENTURES, SERIES _______________________ Ladies and Gentlemen: We have acted as your counsel in connection with the issuance and sale by IES Utilities, Inc. (the "Company") to you pursuant to the Underwriting Agreement dated _______________, ("Underwriting Agreement") between the Company and you, of $___________ in principal amount of __% Senior Debentures, Series ___ (the "Debentures"), issued under the Company's Indenture, dated as of ________, 1997, to The First National Bank of Chicago, as Trustee (the "Trustee") (the "Indenture"). This opinion is being delivered pursuant to subsection (d) of Section 8 of the Underwriting Agreement. We have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In rendering our opinions below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies or specimens. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or other) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or other), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to our opinions, we have relied on certificates of officers of the Company and of public officials. Certain of our opinions expressed below as to factual matters are qualified as being limited "to the best of our knowledge" or by other words to the same or similar effect. Such words, as used herein, mean the information known to ___________, ___________ and __________, the attorneys who have represented you in connection with the transactions contemplated by the Underwriting Agreement. In rendering such opinions, we have not conducted any independent investigation or consulted with other attorneys in our firm with respect to the matters covered thereby. On the basis of such examination, we advise you that, in our opinion: 1. the Company is a validly organized and existing corporation in good standing under the laws of the State of Iowa; 2. the Underwriting Agreement has been duly authorized, executed and delivered by the Company; C - 1 21 3. the Indenture has been duly and validly authorized by all requisite corporate action of the Company, and has been duly executed and delivered by the Company and (assuming the Indenture has been duly authorized, executed and delivered by the Trustee) constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; 4. the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended ("Trust Indenture Act"); 5. the Debentures have been duly authorized and executed by the Company and, when authenticated by the Trustee in accordance with the terms of the Indenture, and delivered to and paid for by you in accordance with the terms of the Underwriting Agreement, will constitute valid and binding obligations of the Company entitled to the benefits and security provided by the Indenture, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; 6. the Chief Accountant of the FERC has authorized the issuance and sale of the Debentures, which authorization is, to the best of our knowledge, still in full force and effect; the issuance and sale of the Debentures to you pursuant to the Underwriting Agreement is in conformity with the terms of such authorization; and no other authorization, approval or consent of any other federal commission or regulatory authority is legally required for the issuance and sale of the Debentures pursuant to the Underwriting Agreement, except such as have been obtained under the Securities Act of 1933, as amended ("Securities Act"), or the Trust Indenture Act; 7. the Company's registration statements on Form S-3 (File Nos. 33-62259 and 333-_____) relating to the Debentures (collectively, the "Registration Statement") have become effective under the Securities Act, and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under the Securities Act; and 8. the Company is a subsidiary of IES Industries Inc., an Iowa corporation, and both are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof. Our opinions expressed above are limited to the laws of the States of Iowa and New York and the federal laws of the United States of America. The opinion set forth above is solely for the benefit of the addressees of this letter and may not be relied upon in any manner by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, DORSEY & WHITNEY LLP C - 2 22 [Letterhead of Dorsey & Whitney LLP] [Date] RE: IES UTILITIES INC. $_____________% SENIOR DEBENTURES, SERIES _______________________ Ladies and Gentlemen: This letter relates to the registration under the Securities Act of 1933, as amended (the "Act"), and offering of $__________ in aggregate principal amount of ___% Senior Debentures, Series ____ (the "Debentures") of IES Utilities Inc., an Iowa corporation (the "Company"). The registration statements of the Company on Form S-3 (File Nos. 33-62259 and 333-29391) (collectively, the "Registration Statement") was filed in accordance with procedures of the Securities and Exchange Commission (the "Commission") permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a post-effective amendment or prospectus supplement that provides information relating to the terms of the securities and the manner of their distribution. The Debentures have been offered by the Prospectus dated __________ (the "Prospectus"), as supplemented by the Prospectus Supplement dated __________ (the "Prospectus Supplement"), which updates or supplements certain information contained in the Prospectus. The Prospectus, as so supplemented, does not necessarily contain a current description of the Company's business and affairs since, pursuant to form S-3, it incorporates by reference certain documents filed with the Commission which contain information as of various dates. In accordance with our understanding with you as to the scope of our services under the circumstances applicable to the offering of the Debentures, we reviewed the Registration Statement, the Prospectus and the Prospectus Supplement, participated in the discussions with your representatives and those of the Company, its counsel and its independent public accountants and advised you as to the requirements of the Act and the applicable rules and regulations thereunder. Between the date of the Prospectus Supplement and the date of delivery of this letter, we participated in further discussions with your representatives and those of the Company, its counsel and its independent public accountants regarding the contents of certain portions of the Prospectus and the Prospectus Supplement and certain related matters, and reviewed certificates of certain officers of the Company, opinions addressed to you from counsel to the Company and letters addressed to you from independent public accountants of the Company. On the basis of the information that was reviewed by us in the course of the performance of the services referred to above, in our opinion (i) the Registration Statement, as of its effective date, and the Prospectus, as supplemented by the Prospectus Supplement as of the date of the Prospectus Supplement, complied as to form in all material respects with the requirements of the Act and the Trust Indenture Act of 1939, as amended, and the respective, applicable rules and regulations thereunder (except that we express no opinion as to financial statements and financial or statistical data contained therein or as to the Form T-1 filed as an Exhibit to the Registration Statement) (ii) the summaries of the terms of the Indenture (as such term is defined in the Prospectus) and the Debentures contained in the Registration Statement, the Prospectus and the Prospectus Supplement fairly describe in all material respects the provisions thereof required to be described in the Registration Statement. Further, nothing that came to our attention in the course of such review has caused us to believe that the Registration Statement, on such effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement and as of the date and time of delivery C - 3 23 of this letter, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the Prospectus Supplement. Also, we do not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement, the Prospectus or the Prospectus Supplement, or as to the statement of the eligibility and qualification of the Trustee under the Indenture under which the Debentures are being issued. This letter is furnished by us as counsel to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, DORSEY & WHITNEY LLP C - 4 24 EXHIBIT D Pursuant to subsection (e) of Section 8 of the Underwriting Agreement, Arthur Andersen LLP shall furnish a letter to the Representative to the effect that: (1) They are independent certified public accountants with respect to the Company within the meaning of the Securities Act and the applicable published rules and regulations thereunder; (2) In their opinion, the financial statements and schedules audited by them and included or incorporated by reference in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (3) On the basis of performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the latest available unaudited financial statements included or incorporated by reference in the Registration Statement, a reading of the latest available interim unaudited financial statements of the Company, the minutes of the meetings of the Board of Directors, the Executive Committee thereof and the stockholders of the Company, respectively, since the close of the most recent audited fiscal year to a specified date not more than five business days prior to the Closing Date, and inquiries of officials of the Company who have responsibility for the respective company's financial and accounting matters (it being understood that the foregoing procedures do not constitute an audit made in accordance with generally accepted auditing standards and that they would not necessarily reveal matters of significance with respect to the comments made in such letter, and, accordingly, that Arthur Andersen LLP makes no representation as to the sufficiency of such procedures for the several Underwriters' purposes), nothing has come to their attention which caused them to believe that (a) the unaudited financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (b) the audited and unaudited selected financial information and supplemental financial information and ratios of earnings to fixed charges included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable disclosure requirements of Regulation S-K promulgated under the Securities Act; (c) any material modifications should be made to said unaudited financial statements for them to be in conformity with generally accepted accounting principles; (d) for the period from ___________ to the date of the latest available unaudited financial statements of the Company, there was any decrease in operating revenues, operating income or net income as compared with the corresponding period in the preceding year, except in all instances for decreases which the Prospectus discloses have occurred or may occur or except as set forth in such letter; and (e) at a specified date not more than _____ days prior to the Closing Date there was any change in the capital stock or long-term debt of the Company, in each case as compared with amounts shown in the most recent balance sheet incorporated by reference in the Prospectus, except in all instances for changes or decreases which the Prospectus discloses have occurred or may occur, for declarations of dividends, for the repayment or redemption of long-term debt, for the amortization of premium or discount on long-term debt, for the redemption or purchase of preferred stock for sinking fund purposes, for any increases in long-term debt in respect of previously issued pollution control revenue bonds, or for changes or decreases as set forth in such letter, identifying the same and specifying the amount thereof. (4) In addition to the audit referred to in their reports included or incorporated by reference in the Prospectus and the inspection of minute books, inquiries and other limited procedures referred to in paragraph 3 above, they have carried out certain specified procedures, not constituting an audit in accordance with generally D - 1 25 accepted auditing standards, with respect to certain amounts, percentages and financial information including certain pro forma information specified by the Representative which are derived from the general accounting records of the Company which appear in the Prospectus (excluding documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representative or in documents incorporated by reference in the Prospectus specified by the Representative and agreed to by the Company, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and have found them to be in agreement. D - 2 EX-4.C 5 PROPOSED FORM OF SUPPLEMENTAL INDENTURE 1 EXHIBIT 4(c) Prepared by: IES Utilities Inc., __________, 200 First St. SE, Cedar Rapids, IA 52401, (319) 398-4505 ================================================================================ IES UTILITIES INC. (formerly known as Iowa Electric Light and Power Company) TO THE FIRST NATIONAL BANK OF CHICAGO as Trustee -------------- ______ Supplemental Indenture Dated as of ________ -------------- TO INDENTURE OF MORTGAGE and DEED OF TRUST Dated as of September 1, 1993 - -------------------------------------------------------------------------------- 2 ______ SUPPLEMENTAL INDENTURE, dated as of _______ (the "______ Supplemental Indenture"), made by and between IES UTILITIES INC. (formerly known as Iowa Electric Light and Power Company), a corporation organized and existing under the laws of the State of Iowa (the "Company"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association organized and existing under the laws of the United States of America (the "Trustee"), as Trustee under the Indenture of Mortgage and Deed of Trust dated as of September 1, 1993, hereinafter mentioned. WHEREAS, the Company has heretofore executed and delivered its Indenture of Mortgage and Deed of Trust dated as of September 1, 1993, to the Trustee, for the security of the securities of the Company to be issued thereunder (the "Collateral Trust Bonds" or "Bonds"), and the said Indenture has been supplemented by [five] supplemental indentures, dated as of October 1, 1993, November 1, 1993, March 1, 1995, September 1, 1996, April 1, 1997, and [__________], which Indenture as so supplemented and to be hereby supplemented is hereinafter referred to as the "Indenture"; and WHEREAS, the Company desires to create a series of Collateral Trust Bonds to be issued under the Indenture, to be known as Collateral Trust Bonds, ___% Series Due ____ (the "Collateral Trust Bonds of the ____% Series"); and WHEREAS, the Company, in the exercise of the powers and authority conferred upon and reserved to it under the provisions of the Indenture, has duly resolved and determined to make, execute and deliver to the Trustee a ______ Supplemental Indenture in the form hereof for the purposes herein provided; and WHEREAS, pursuant to Section 1401 of the Indenture, the Company may from time to time execute one or more supplemental indentures in order to better assure, convey and confirm unto the Trustee any property subject to the Lien of the Indenture; and WHEREAS, the Company desires to so assure, convey and confirm property described in Exhibit A to this Supplemental Indenture; and WHEREAS, all conditions and requirements necessary to make this ______ Supplemental Indenture a valid, binding and legal instrument have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH: THAT IES UTILITIES INC., in consideration of the purchase and ownership from time to time of the Bonds created in the ______ Supplemental Indenture and the service by the Trustee, and its successors, under the Indenture and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trust under the Indenture, for the benefit of those who shall hold the Bonds as follows: ARTICLE I DESCRIPTION OF COLLATERAL TRUST BONDS OF THE ___% SERIES SECTION 1. The Company hereby creates a new series of Bonds to be known as "Collateral Trust Bonds of the ___% Series." The Collateral Trust Bonds of the ___% Series shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, all of the terms, conditions and covenants of the Indenture, as supplemented and modified. The commencement of the first interest period shall be __________. The Collateral Trust Bonds of the ___% Series shall mature __________, and shall bear interest at the rate of ___% per annum, payable semi-annually on the 1st day of _____ and the 1st day of _____ in each year, commencing on _________. The person in whose name any of the Collateral Trust Bonds of the ___% Series is registered at the close of business on any record date (as hereinafter defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Collateral Trust Bonds of the ___% Series upon any transfer or exchange subsequent to the record date and prior to such interest payment date; provided, however, that if and to the extent the Company shall default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid as provided in Section 307 of the Indenture. The term "record date" as used in this Section with respect to any interest payment date shall mean the _____ 15 or _____ 15, as the case may be, next preceding the semi-annual interest payment date, or, if such _____ 15 or _____ 15 shall be a legal holiday or a day on which banking institutions in the Borough of Manhattan, the City of New York, State of New York or in the City of Chicago, State of Illinois, are authorized by law to close, then the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized to close. SECTION 2. The Collateral Trust Bonds of the ___% Series shall be issued only as registered Bonds without coupons of the denomination of $1,000, or any integral multiple of $1,000, appropriately numbered. Subject to the terms and conditions set forth in the Indenture, the Collateral Trust Bonds of the ___% Series may be exchanged for one or more new Collateral Trust Bonds of the ___% Series or other authorized denominations, for the same aggregate principal amount, upon surrender thereof, to the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York. Collateral Trust Bonds of the ___% Series may be exchanged or transferred without expense to the registered owner thereof except that any taxes or other governmental charges that may be imposed in connection with such transfer or exchange shall be paid by the registered owner requesting such transfer or exchange as a condition precedent to the exercise of such privilege. SECTION 3. Except as otherwise provided in this Section, the registered owner of all Collateral Trust Bonds of the ___% Series shall be CEDE & Co., as nominee of The Depository Trust Company ("DTC"). Payment of interest for any Collateral Trust Bonds of the ___% Series registered as of each record date in the name of CEDE & Co. shall be made by wire transfer to the account of CEDE & Co. on the interest payment date for such Collateral Trust Bonds of the ___% Series at the address indicated on the record date for CEDE & Co. in the registration books of the Company kept by Trustee, as registrar. The Collateral Trust Bonds of the ___% Series shall initially be issued in the form of one or more fully registered global bonds ("Global Bonds") which will have an aggregate principal amount equal to the Collateral Trust Bonds of the ___% Series represented thereby. Upon initial issuance, the ownership of the Collateral Trust Bonds of the ___% Series shall be registered in the registration books of the Company kept by the Trustee in the name of CEDE & Co., as nominee of DTC. The Trustee and the Company may treat DTC (or its nominee) as the sole and exclusive owner of the Collateral Trust Bonds of the ___% Series registered in its name for the purposes of payment of the principal of, premium, if any, or interest on such Collateral Trust Bonds of the ___% Series, giving any notice permitted or required to be given to Holders herein, registering the transfer of such Collateral Trust Bonds of the ___% Series, obtaining any consent or other action to be taken by Holders and for all other purposes whatsoever; and neither the Trustee nor the Company shall be affected by any notice to the contrary. Neither the Trustee nor the Company shall have any responsibility or obligation to any DTC participant, any Person claiming a beneficiary ownership interest in Collateral Trust Bonds of the ___% Series registered in the name of CEDE & Co. under or through DTC or any DTC participant, or any other Person which is not shown on the registration books of the Company kept by the Trustee as being a Holder with respect to the accuracy of any records maintained by DTC, CEDE & Co. or any DTC participant; the payment by DTC or any DTC participant to any beneficial owner of any amount in respect of the principal of, premium, if any, or interest on the Collateral Trust Bonds of the ___% Series registered in the name of CEDE & Co.; the delivery to any DTC participant or any beneficial owner of any notice which is permitted or required to be given to Holders herein; the selection by DTC or any DTC participant of any Person to receive payment in the event of a partial payment of any Collateral Trust Bonds of the ___% Series registered in the name of CEDE & Co.; or any consent given or other action taken by DTC as Holder. The Paying Agent shall pay all principal of, premium, if any, and interest on any Collateral Trust Bonds of the ___% Series registered in the name of CEDE & Co., only to or upon the order of CEDE & Co., as nominee of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Company's obligations with respect to the principal of, premium, if any, and interest on such Collateral Trust Bonds of the ___% Series to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC had determined to substitute a new nominee in place of CEDE & Co., and subject to the provisions herein with respect to record dates, the words "CEDE & Co." herein shall refer to such new nominee of DTC. A Global Bond shall be exchangeable for definitive certificates registered in the names of persons other than DTC or its nominee only if (i) DTC notifies the Company that it is unwilling or unable to continue as a depositary for such Global Bond and no successor depositary shall have been appointed, or if at any time DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934, at a time when DTC is required to be so registered to act as such depositary, (ii) the Company in its sole discretion determines that such Global Bond shall be so exchangeable or (iii) there shall have occurred and be continuing an Event of Default with respect to the Collateral Trust Bonds of the ___% Series. In any such event, the Trustee shall issue, register the transfer of and exchange definitive certificates as requested by DTC in appropriate amounts and the Company and the Trustee shall be obligated to deliver definitive certificates. In the event definitive certificates are issued to Holders other than DTC, the provisions herein shall apply to, among other things, the registration, transfer of and exchange of such certificates and the method of payment of principal of, premium, if any, and interest on such certificates. Whenever DTC requests the Company and the Trustee to do so, the Trustee and the Company will cooperate with DTC in taking appropriate action after reasonable notice (i) to make available one or more separate certificates evidencing the Collateral Trust Bonds of the ___% Series registered in the name of CEDE & Co., to any DTC participant having Collateral Trust Bonds of the ___% Series credited to its DTC account or (ii) to arrange for another bonds depository to maintain custody of certificates evidencing such Collateral Trust Bonds of the ___% Series. So long as any Collateral Trust Bonds of the ___% Series are registered in the name of CEDE & Co., as nominee of DTC, all payments with respect to the principal of, premium, if any, and interest on such Collateral Trust Bonds of the ___% Series and all notices, with respect to such Collateral Trust Bonds of the ___% Series shall be made and given to DTC as provided in the Letter of Representations dated __________. In connection with any notice or other communication to be provided to Holders by the Company or the Trustee with respect to any consent or other action to be taken by Holders, so long as any Collateral Trust Bonds of the ___% Series are registered in the name of CEDE & Co., as nominee of DTC, the Company or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. The notice requirements set forth in the Letter of Representations with respect to redemptions, conversions and mandatory tenders shall be effective whenever the Collateral Trust Bonds of the ___% Series are registered in the name of DTC or its nominee, notwithstanding any other provision herein, to the extent such other provisions are incompatible with the notice requirements set forth in the Letter of Representations. SECTION 4. The Collateral Trust Bonds of the ___% Series and the Trustee's Certificate of Authentication shall be substantially in the following forms respectively: [FORM OF FACE OF BOND] [FORM OF LEGEND FOR GLOBAL BOND] Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. IES UTILITIES INC. COLLATERAL TRUST BOND, ___% SERIES DUE ____. No. ________ $_________ CUSIP ___________ IES UTILITIES INC., a corporation organized and existing under the laws of the State of Iowa (the "Company," which term shall include any successor corporation as defined in the Indenture hereinafter referred to), for value received, hereby promises to pay to ______________, or its registered assigns, the sum of _____________ ($_______) dollars on the ___ day of _____, ____, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts, and to pay interest thereon in like coin or currency from ______ __, ____, payable semi-annually, on the ___ day of ______ and ______ in each year, commencing _______ __, ____, at the rate of ___% per annum, until the Company's obligation with respect to the payment of such principal shall be discharged as provided in the Indenture hereinafter mentioned. The interest so payable on any ___ day of ______ or ______ will, subject to certain exceptions provided in the _____ Supplemental Indenture dated as of ______ __, ____, be paid to the person in whose name this Collateral Trust Bond is registered at the close of business on the immediately preceding ______ ____ or ______ ____, as the case may be. Except as otherwise provided in the Indenture, any such interest not paid or duly provided for shall forthwith cease to be payable to such person, and shall either be paid to the person in whose name this Collateral Trust Bond is registered at the close of business on a Special Record Date for the payment of such interest to be fixed by the Trustee, notice of which shall be given to holders of Collateral Trust Bonds of this Series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Collateral Trust Bonds of this Series may be listed, and upon such notice as may be required by such exchange, all as more fully provided for in said Indenture. Both principal of, and interest on, this Collateral Trust Bond are payable at the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York. This Collateral Trust Bond shall not be entitled to any benefit under the Indenture or any indenture supplemental thereto, or become valid or obligatory for any purpose, until the form of certificate endorsed hereon shall have been signed by or on behalf of The First National Bank of Chicago, the Trustee under the Indenture, or a successor trustee thereto under the Indenture, or by an authenticating agent duly appointed by the Trustee in accordance with the terms of the Indenture. The provisions of this Collateral Trust Bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, IES Utilities Inc. has caused this Collateral Trust Bond to be signed (manually or by facsimile signature) in its name by an Authorized Executive Officer, as defined in the Indenture, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested (manually or by facsimile signature) by an Authorized Executive Officer, as defined in the Indenture. Dated ________________ IES UTILITIES INC. By ---------------------------- Authorized Executive Officer ATTEST: - - ----------------------------- Authorized Executive Officer [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Collateral Trust Bonds of the series designated therein referred to in the within-mentioned Indenture and _____ Supplemental Indenture dated as of ______ __, ____. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By ---------------------- Authorized Officer 3 [FORM OF REVERSE OF BOND] IES UTILITIES INC. COLLATERAL TRUST BOND, ____% SERIES DUE ____ This Collateral Trust Bond is one of a duly authorized issue of Collateral Trust Bonds of the Company in an aggregate principal amount of up to $________ of the series hereinafter specified, all issued and to be issued under and equally secured by an Indenture of Mortgage and Deed of Trust dated as of September 1, 1993, executed by the Company to The First National Bank of Chicago, as Trustee (the "Trustee"), as supplemented by _____ supplemental indentures, (including a _____ Supplemental Indenture dated as of ______ __, ____), each executed by the Company to said Trustee (said Indenture, as so supplemented, being herein sometimes referred to as the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of registered owners of the Collateral Trust Bonds and of the Trustee in respect thereof, and the terms and conditions upon which the Collateral Trust Bonds are, and are to be, secured. The Collateral Trust Bonds may be issued in series, for various principal sums, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture. This Collateral Trust Bond is one of a series designated as the "Collateral Trust Bonds, ____% Series Due ____" (the "Collateral Trust Bonds of the ____% Series") of the Company, in an aggregate principal amount of up to $________, issued under and secured by the Indenture and described in the _____ Supplemental Indenture thereto dated as of ______ __, ____ (the "_____ Supplemental Indenture") between the Company and the Trustee. The Collateral Trust Bonds of the ____% Series will not be redeemable prior to their maturity by the Company; provided, however, that such Bonds may be redeemed by the Company in whole at any time or in part from time to time, up on at least 30 days notice, at the redemption price equal to 100% of the principal amount thereof, plus accrued interest to the date of redemption, through application of cash received by the Trustee as a result of properties of the Company being taken by eminent domain or being sold to an entity possessing the power of eminent domain. In case an Event of Default, as defined in the Indenture, shall occur, the principal of all the Collateral Trust Bonds of the ____% Series at any such time outstanding under the Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that such declaration may be rescinded under certain circumstances. No reference herein to the Indenture and no provision of this Collateral Trust Bond or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Collateral Trust Bond at the times, place and rate, in the coin or currency, and in the manner, herein prescribed. To the extent permitted on the front hereof, this Collateral Trust Bond may be exchanged or transferred without expense to the registered owner hereof except that any taxes or other governmental charges that may be imposed in connection with such transfer or exchange shall be paid by the registered owner requesting such transfer or exchange as a condition precedent to the exercise of such privilege. 4 Prior to due presentment of this Collateral Trust Bond for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Collateral Trust Bond is registered as the absolute owner hereof for all purposes, whether or not this Collateral Trust Bond be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. As provided in the Indenture, no recourse shall be had for the payment of the principal of or premium, if any, or interest on any Collateral Trust Bonds or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, stockholder, officer or director, as such, past, present or future of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and all the Collateral Trust Bonds are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Collateral Trust Bonds. [END OF BOND FORM] ARTICLE II ISSUE OF COLLATERAL TRUST BONDS SECTION 1. Pursuant to the terms of Section 401 of the Indenture, the Company hereby exercises the right to obtain the authentication of $__________ principal amount of Collateral Trust Bonds. SECTION 2. Such Collateral Trust Bonds of the ___% Series may be authenticated and delivered prior to the filing for recordation of this ______ Supplemental Indenture. 5 ARTICLE III REDEMPTION The Collateral Trust Bonds of the ___% Series will not be redeemable prior to their maturity; provided, however, that such Bonds may be redeemed in whole at any time or in part from time to time, upon at least 30 days notice, at the redemption price equal to 100% of the principal amount thereof, plus accrued interest to the date of redemption, through application of cash received by the Trustee as a result of properties of the Company being taken by eminent domain or being sold to an entity possessing the power of eminent domain. ARTICLE IV DESCRIPTION OF PROPERTY To secure the payment of the principal of, premium, if any, and interest, if any, on all Collateral Trust Bonds issued under the Indenture and Outstanding (as defined in the Indenture), when payable in accordance with the provisions thereof, and to secure the performance by the Company of, and its compliance with, the covenants and conditions of the Indenture, the Company hereby grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges, sets over and confirms to the Trustee a security interest in, all right, title and interest of the Company in and to the property described in Exhibit A to this ______ Supplemental Indenture. TO HAVE AND TO HOLD all said property hereby granted, bargained, sold, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, or in which a security interest has been granted by the Company in this ______ Supplemental Indenture, unto the Trustee and its successors and assigns forever, but in trust nevertheless upon the trusts, for the purposes, and subject to all the exceptions and reservations, terms, conditions, provisions and restrictions of the Indenture, and for the equal and proportionate benefit and security of all present and future holders of the Collateral Trust Bonds, without any preference, priority or distinction of any one Collateral Trust Bond over any other Collateral Trust Bond by reason of priority in the issue or negotiation thereof or otherwise, except as may otherwise be expressly provided in the Indenture, but subject, however, to all the conditions, agreements, covenants, exceptions, limitations, restrictions and reservations expressed or provided in the deeds or other instruments of record affecting the property, or any part or portion thereof, insofar as the same are at the time of execution hereof in force and effect and permitted by law. ARTICLE V THE TRUSTEE The Trustee hereby accepts the trusts hereby declared and provided, and agrees to perform the same upon the terms and conditions in the Indenture set forth and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this ______ Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. In general, each and every term and condition contained in Article Eleven of the Indenture shall apply to this Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this ______ Supplemental Indenture. ARTICLE VI MISCELLANEOUS PROVISIONS This ______ Supplemental Indenture may be simultaneously executed in any number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this ______ Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. IES UTILITIES INC. By ------------------------------ ATTEST: - - ------------------ THE FIRST NATIONAL BANK OF CHICAGO, Trustee By ------------------------------ ATTEST: - - ------------------- 6 STATE OF IOWA ) ) ss: COUNTY OF LINN ) On the __th day of _____, ____, before me personally came _________, to me known, who, being by me duly sworn, did depose and say that he is the __________ of IES UTILITIES INC., the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority, acknowledging the instrument to be the free act and deed of said corporation. -------------------------- Notary Public [Notarial Seal] 7 STATE OF ILLINOIS ) ) ss: COUNTY OF COOK ) On the ___th day of _____, _____, before me personally came __________ to me known, who, being by me duly sworn, did depose and say that he is a __________ of THE FIRST NATIONAL BANK OF CHICAGO, the national banking association described in and which executed the foregoing instrument; that he knows the seal of said national banking association; that the seal affixed to said instrument is the seal of said national banking association; that it was so affixed by authority of the Board of Directors of said national banking association, and that he signed his name thereto by like authority, acknowledging the instrument to be the free act and deed of said national banking association. ----------------------- Notary Public [Notarial Seal] 8 EXHIBIT A DESCRIPTION OF PROPERTY EX-4.F 6 PROPOSED FORM OF SUPPLEMENTAL INDENTURE 1 EXHIBIT 4(f) Prepared by: IES Utilities Inc., __________, 200 First St. SE, Cedar Rapids, IA 52401, (319) 398-4505 ================================================================================ IES UTILITIES INC. (formerly known as Iowa Electric Light and Power Company) To THE FIRST NATIONAL BANK OF CHICAGO Trustee -------------------------- __________ Supplemental Indenture Dated as of __________ -------------------------- SUPPLEMENTAL TO INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF AUGUST 1, 1940 2 THIS __________ SUPPLEMENTAL INDENTURE, dated as of _________, between IES UTILITIES INC. (formerly known as Iowa Electric Light and Power Company), a corporation organized and existing under the laws of the State of Iowa (hereinafter called the "Company"), party of the first part, and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee, a national banking association organized and existing under the laws of the United States of America, party of the second part, W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company has heretofore executed and delivered its Indenture of Mortgage and Deed of Trust, dated as of August 1, 1940 (hereinafter called the "Original Indenture"), to the Trustee to secure the first mortgage bonds (herein sometimes referred to as "first mortgage bonds") of the Company, issuable in series; and WHEREAS, the Company thereafter executed and delivered certain Supplemental Indentures, First through [Sixty-third], inclusive, for the various purposes of creating additional series of first mortgage bonds, conveying and confirming unto the Trustee certain additional property, correcting the description of a certain parcel of land as set forth in the Original Indenture and amending the Original Indenture in certain respects (the Original Indenture and the above referred to Supplemental Indentures together with this __________ Supplemental Indenture being herein sometimes collectively referred to as the "Indenture"); and WHEREAS, there have been issued and are now outstanding under the Indenture the following described first mortgage bonds: First Mortgage Bonds Principal Amount -------------------- ---------------- WHEREAS, the Original Indenture in Section 158 provides that the Company, when authorized by resolution of the Board, and the Trustee, may at any time, subject to the restrictions in the Original Indenture contained, enter into such an indenture supplemental to the Original Indenture as may or shall be by them deemed necessary or desirable for the purpose of creating any new series of first mortgage bonds or of adding to the covenants and agreements of the Company in the Original Indenture contained, other covenants and agreements thereafter to be observed by the Company and for any other purpose not inconsistent with the terms of the Original Indenture and which shall not impair the security of the same; and WHEREAS, the Company desires to execute and deliver this __________ Supplemental Indenture, in accordance with the provisions of the Original Indenture, for the purpose of providing for the creation of a new series of first mortgage bonds to be designated "First Mortgage Bonds, Collateral Series __, Due ____" (hereinafter called the "Bonds of Series __" or the "Bonds"), and for the purpose of adding to the covenants and agreements of the Company in the Original Indenture contained, other covenants and agreements hereafter to be observed by the Company; WHEREAS, the Bonds are to be issued to The First National Bank of Chicago as trustee (the "New Mortgage Trustee") under the Company's Indenture of Mortgage and Deed of Trust dated as of September 1, 1993 (the "New Mortgage"), and are to be owned and held by the New Mortgage Trustee as "Class 'A' Bonds" (as defined in the New Mortgage) in accordance with the terms of the New Mortgage; and WHEREAS, all acts and proceedings required by law and by the Articles of Incorporation of the Company, including all action requisite on the part of its stockholders, directors and officers, necessary to make the Bonds, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, and to constitute the Indenture a valid and binding mortgage and deed of trust for the security of the Bonds in accordance with the terms of the Indenture and the terms of the Bonds, have been done and taken; and the execution and delivery of this __________ Supplemental Indenture have been in all respects duly authorized. NOW, THEREFORE, THIS __________ SUPPLEMENTAL INDENTURE WITNESSETH, that, in order to further secure the payment of the principal of, premium, if any, and interest, if any, on all first mortgage bonds at any time issued and outstanding under the Indenture, according to their tenor, purport and effect, and to secure the performance and observance of all the covenants and conditions in said first mortgage bonds and in the Indenture contained (except any covenant of the Company with respect to the refund or reimbursement of taxes, assessments or other governmental charges on account of the ownership of any first mortgage bonds, or the income derived therefrom, for which the holders of such first mortgage bonds shall look only to the Company and not to the property mortgaged and pledged) and for and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and of the sum of $1.00 duly paid to the Company by the Trustee at or before the ensealing and delivery hereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Company has executed and delivered this __________ Supplemental Indenture, and, by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over, warrant and confirm unto the Trustee the properties of the Company described and referred to in the Original Indenture and all indentures supplemental thereto, as thereby conveyed or intended so to be, and not heretofore specifically released, together with all and singular the plants, buildings, improvements, additions, tenements, hereditaments, easements, rights, privileges, licenses and franchises and all other appurtenances whatsoever belonging or in any wise appertaining to any of the property hereby mortgaged or pledged, or intended so to be, or any part thereof, now owned or which may hereafter be owned or acquired by the Company, and the reversion and reversions, remainder and remainders, and the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and of every part and parcel thereof, and all the estate, right, title, interest, property, claim and demand of every nature whatsoever of the Company, at law or in equity, or otherwise howsoever, in, of and to such property and every part and parcel thereof, including the following property acquired by the Company since the execution and delivery of the [Sixty-third] Supplemental Indenture dated as of [April 1, 1997]: TO HAVE AND TO HOLD all and singular the lands, properties, estates, rights, franchises, privileges and appurtenances mortgaged, conveyed, pledged or assigned as aforesaid, or intended so to be, together with all the appurtenances thereunto appertaining, unto the Trustee and its successors and assigns forever, upon the trusts, for the uses and purposes and under the terms and conditions and with the rights, privileges and duties as in the Indenture set forth; Subject, however, to the reservations, exceptions, limitations and restrictions contained in the several deeds, leases, servitudes, contracts or other instruments through which the Company acquired and/or claims title to and/or enjoys the use of the aforesaid properties; and subject also to Permitted Encumbrances (as defined in Section 24 of the Original Indenture) and, as to any property acquired by the Company since the execution and delivery of the Original Indenture, to any liens thereon existing, and to any liens for unpaid portions of the purchase money placed thereon, at the time of such acquisition, but only to the extent that such liens are permitted by Sections 72 and 83 of the Original Indenture, as amended, and Section 7 of this __________ Supplemental Indenture; BUT IN TRUST, NEVERTHELESS, for the equal and proportionate use, benefit, security and protection of those who from time to time shall hold the first mortgage bonds and coupons authenticated and delivered under the Indenture and duly issued by the Company, without any discrimination, preference or priority of any one first mortgage bond or coupon over any other by reason of priority in the time of issue, sale or negotiation thereof or otherwise, except as provided in Section 69 of the Original Indenture, so that, subject to said provisions, each and all of said first mortgage bonds and coupons shall have the same right, lien and privilege under the Indenture and shall be equally and ratably secured thereby (except as any sinking, amortization, improvement, renewal or other fund, or any other covenants or agreements established in accordance with the provisions of the Original Indenture, may afford additional security for the first mortgage bonds of any particular series), and shall have the same proportionate interest and share in the Trust Estate (as defined in the Original Indenture), with the same effect as if all of the first mortgage bonds and coupons had been issued, sold and negotiated simultaneously on the date of the delivery of the Original Indenture; and in trust for enforcing payment of the principal of the first mortgage bonds and of the interest and premium, if any, thereon, according to the tenor, purport and effect of the first mortgage bonds and coupons and of the Indenture, and for enforcing the terms, provisions, covenants and stipulations therein and in the first mortgage bonds set forth, and upon the trusts, uses and purposes and subject to the covenants, agreements and conditions set forth and declared in the Indenture; AND THIS __________ SUPPLEMENTAL INDENTURE FURTHER WITNESSETH, that the Company hereby covenants and agrees to and with the Trustee and its successors and assigns forever as follows: SECTION 1. There shall be, and is hereby created, a new series of first mortgage bonds, known as and entitled "First Mortgage Bonds, Collateral Series __, Due ____," and the form thereof shall be substantially as hereinafter set forth. The Bonds of Series __ shall be issued and delivered to the New Mortgage Trustee under the New Mortgage as the basis for the authentication and delivery under the New Mortgage of a series of securities ("Collateral Trust Securities"). As provided in the New Mortgage, the Bonds of Series __ will be registered in the name of the New Mortgage Trustee, subject to the provisions of the New Mortgage, for the benefit of the holders of all securities from time to time outstanding under the New Mortgage, and the Company shall have no interest therein. The Bonds of Series __ will not be transferable except to a successor trustee under the New Mortgage. Any payment or deemed payment by the Company under the New Mortgage of the principal of or interest, if any, on the Collateral Trust Securities (other than by the application of the proceeds of a payment in respect of the Bonds of Series __) shall, to the extent thereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal of or interest, if any, on such Bonds of Series __, as the case may be, which is then due. The principal amount of the Bonds of Series __ shall be limited to $__________, except in case of the issuance of Bonds as provided in Section 14 of the Original Indenture on account of mutilated, lost, stolen, or destroyed Bonds. The Bonds of Series __ shall be registered bonds only without coupons of the denomination of $1,000 and any multiple of $1,000, and of such respective amounts of each of said denominations as may be executed by the Company and delivered to the Trustee for authentication and delivery. Notwithstanding the provisions of Section 7 of the Original Indenture to the contrary, no reservation of unissued coupon bonds shall be required with respect to the Bonds of Series __. All Bonds of Series __ shall mature __________, and shall not bear interest, except that if the Company should default in payment of principal on a Bond of Series __, such Bond shall bear interest on such defaulted principal at the rate of 6% per annum (to the extent that payment of such interest is enforceable under applicable law) until the Company's obligation with respect to the payment of such principal shall be discharged. The principal, premium, if any, and the interest, if any, on the Bonds of Series __ shall be payable at the office of the Trustee in the City of Chicago, State of Illinois, or at the option of the holder, at the principal corporate trust office of First Chicago Trust Company of New York in the Borough of Manhattan in the City of New York, in any coin or currency of the United States of America which at the time of payment shall be legal tender for public and private debts. The Bonds of Series __ shall be subject to redemption under certain circumstances specified in Section 54 of the Original Indenture as amended. The Bonds of Series __ will be redeemable, at the option of the Company, in whole at any time or in part from time to time, upon 30 days notice, at a redemption price equal to 100% of the principal amount thereof together with accrued interest, if any, thereon to the date fixed for redemption. The Bonds shall be redeemed no later than the redemption of the Collateral Trust Securities, in a principal amount equal to the principal amount of Collateral Trust Securities then being redeemed, and at a redemption price equal to the redemption price (excluding interest other than interest on defaulted principal, if any) applicable to such redemption of Collateral Trust Securities. Notwithstanding Section 11 of the Original Indenture, the Company may execute, and the Trustee shall authenticate and deliver, definitive Bonds of Series __ in typewritten form. Subject to the provisions of Section 8 of the Original Indenture, all definitive Bonds of Series __ shall be interchangeable for other Bonds of Series __ of a different authorized denomination or denominations, as requested by the holder surrendering the same, upon surrender to the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York. Anything contained in Section 13 of the Original Indenture notwithstanding, upon such interchange of Bonds of Series __, no charge may be made by the Company except the payment of a sum sufficient to reimburse the Company for any stamp tax or other governmental charge incident thereto. The Trustee is hereby appointed Registrar of the Bonds of Series __ for the purpose of registering and transferring Bonds of Series __ as in Section 12 of the Original Indenture provided. Bonds of Series __ may also be so registered and transferred at the principal corporate trust office of First Chicago Trust Company of New York in the Borough of Manhattan in the City of New York, which company is hereby authorized to act as co-Registrar of Bonds of Series __ in the City of New York. In case any Bonds of Series __ shall be redeemed in part only, any delivery pursuant to Section 97 of the Original Indenture of a new Bond or Bonds of Series __ of an aggregate principal amount equal to the unredeemed portion of such Bond of Series __ shall, at the option of the registered owner, be made by the co-Registrar. For all purposes of Articles Eleven and Eighteen of the Original Indenture, First Chicago Trust Company of New York in the City of New York, as the New York Paying Agent for Bonds of Series __, shall be deemed to be the agent of the Trustee for the purpose of receiving all or any part, as may be directed by the Trustee, of any deposit for the purpose of redeeming, or of paying at maturity, any Bonds of Series __, and any money so deposited with First Chicago Trust Company of New York in the City of New York, upon the direction of the Trustee, in trust for the purpose of paying the redemption price of, or of paying at maturity, any Bonds of Series __, shall be deemed to constitute a deposit in trust with, and to be held in trust by, the Trustee in accordance with the provisions of Article Eleven or Eighteen of the Original Indenture. So long as any Bonds of Series __ shall be outstanding, in addition to the offices or agencies required to be maintained by the provisions of the Original Indenture, the Company shall keep or cause to be kept at an office or agency to be maintained by the Company in the Borough of Manhattan, the City of New York, books for the registration and transfer of Bonds pursuant to the foregoing provisions of this Section and to the provisions of the Original Indenture. SECTION 2. For the purpose of redemption under certain circumstances specified in Section 54 of the Original Indenture, as amended, by the application of cash received by the Trustee as the result of the taking by eminent domain or of the purchase by a public authority of properties of the Company, the Bonds shall be redeemable at a special redemption price of 100% of the principal amount thereof together with accrued interest, if any, to the date fixed for redemption. SECTION 3. The Bonds and the certificate of authentication to be borne by such Bonds shall be substantially in the following forms, respectively: [FORM OF FACE OF BOND] This Bond is not transferable except to a successor trustee under the Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, between IES Utilities Inc. and The First National Bank of Chicago, Trustee. No. $ IES UTILITIES INC. FIRST MORTGAGE BOND, COLLATERAL SERIES __ Due ____ IES UTILITIES INC. (hereinafter called the "Company"), a corporation of the State of Iowa, for value received, hereby promises to pay to THE FIRST NATIONAL BANK OF CHICAGO, as trustee under the Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, between the Company and such trustee, or registered assigns, on the ____ day of ______, ____, the sum of ___________ ($________) dollars in any coin or currency of the United States of America which at the time of payment shall be legal tender for public and private debts. This Bond shall not bear interest except that, if the Company should default in the payment of principal hereof, this Bond shall bear interest on such defaulted principal at the rate of 6% per annum (to the extent that payment of such interest is enforceable under applicable law) until the Company's obligation with respect to the payment of such principal shall be discharged as provided in the Indenture hereinafter mentioned. Principal of and interest, if any, on this Bond shall be payable at the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York. Reference is made to the further provisions of this Bond set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by The First National Bank of Chicago, or its successor, as Trustee under the Indenture hereinafter mentioned. IN WITNESS WHEREOF, the Company has caused this Bond to be signed in its name, manually or in facsimile, by its President or one of its Vice Presidents and its corporate seal to be impressed or imprinted hereon and attested, manually or in facsimile, by its Secretary or one of its Assistant Secretaries. Dated: IES UTILITIES INC. By ----------------------------- Authorized Executive Officer ATTEST: - - ----------------------------- Secretary [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the first mortgage bonds described in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By --------------------------------- Authorized Officer [FORM OF REVERSE OF BOND] IES UTILITIES INC. FIRST MORTGAGE BOND, COLLATERAL SERIES __ Due ____ This Bond is one of an authorized issue of Bonds of the Company known as its "first mortgage bonds", issued and to be issued in series under, and all equally and ratably secured (except as any sinking, amortization, improvement, renewal or other fund, or any other covenants or agreements, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the first mortgage bonds of any particular series) by an Indenture of Mortgage and Deed of Trust dated as of August 1, 1940, executed by the Company to The First National Bank of Chicago, as Trustee, as supplemented by ________ Supplemental Indentures (including a Seventh Supplemental Indenture dated as of July 1, 1946, a Thirty-second Supplemental Indenture dated as of September 1, 1966, a Forty-fifth Supplemental Indenture dated as of November 1, 1976, a Fifty-fifth Supplemental Indenture dated as of March 1, 1988, a Fifty-sixth Supplemental Indenture dated as of October 1, 1988, a Fifty-ninth Supplemental Indenture dated as of October 1, 1993, a Sixtieth Supplemental Indenture dated as of November 1, 1993, a Sixty-second Supplemental Indenture dated as of September 1, 1996, a Sixty-third Supplemental Indenture dated as of April 1, 1997, and a __________ Supplemental Indenture dated as of ________) each duly executed by the Company to said Trustee (said Indenture, as so supplemented, being herein sometimes referred to as the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the holders of said first mortgage bonds, and of the Trustee and of the Company in respect of such security, and the terms and conditions upon which said first mortgage bonds are and are to be issued and secured. As provided in, and to the extent permitted by, the Indenture, the rights and obligations of the Company and of the holders of said first mortgage bonds may be changed and modified with the consent of the Company by the affirmative vote of the holders of at least 75% in principal amount of the first mortgage bonds then outstanding affected by such change or modification (excluding first mortgage bonds disqualified from voting by reason of the Company's interest therein as provided in the Indenture); provided, however, that without the consent of the registered owner hereof no such change or modification shall permit the reduction of the principal or the extension of the maturity of the principal of this Bond or the reduction of the rate of interest, if any, hereon or any other modification of the terms of payment of such principal or interest. As provided in the Indenture, said first mortgage bonds are issuable in series which may vary as in the Indenture provided or permitted. This Bond is one of a series of first mortgage bonds entitled "First Mortgage Bonds, Collateral Series __, Due ____". Any payment or deemed payment by the Company of the principal of or interest, if any, on the Collateral Trust Securities (as defined in the ________ Supplemental Indenture) (other than by the application of the proceeds of a payment in respect of this Bond) shall, to the extent thereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal of or interest, if any, on this Bond which is then due. This Bond is redeemable, at the option of the Company, in whole at any time or in part from time to time, upon 30 days notice, at a redemption price equal to 100% of the principal amount thereof together with accrued interest, if any, thereon to the date fixed for redemption. This Bond is also subject to redemption under certain circumstances specified in Section 54 of the Indenture by the application of cash received by the Trustee as the result of the taking by eminent domain or of the purchase by a public authority of properties of the Company, as more fully provided in, and subject to the provisions of, the Indenture, upon at least 30 days prior notice given as aforesaid, at a special redemption price of 100% of the principal amount thereof. In addition, the Bonds shall be redeemed by the Company no later than the redemption of the Collateral Trust Securities in a principal amount equal to the principal amount of Collateral Trust Securities then being redeemed, and at a redemption price equal to the redemption price (excluding interest other than interest on defaulted principal, if any) applicable to such redemption of Collateral Trust Securities. If an event of default, as defined in the Indenture, shall occur, the principal of this Bond may become or be declared due and payable, in the manner and with the effect provided in the Indenture. To the extent permitted on the front hereof, this Bond is transferable by the registered owner hereof in person or by attorney authorized in writing at the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York, upon surrender and cancellation of this Bond and upon any such transfer a new first mortgage bond of the same series, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, for the purpose of receiving payment and for all other purposes. This Bond, alone or with other first mortgage bonds of the same series, may be exchanged upon surrender thereof to the Trustee at the agency of the Company in the City of Chicago, Illinois, or, at the option of the holder, at the agency of the Company in the City of New York, for one or more other first mortgage bonds of the same series and of the same aggregate principal amount but of a different authorized denomination or denominations, upon payment of a sum sufficient to reimburse the Company for any stamp tax or other governmental charge incident thereto, and subject to the terms and conditions set forth in the Indenture. No recourse shall be had for the payment of the principal of or interest, if any, on this Bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture or of any indenture supplemental thereto, against any incorporator, stockholder, director, or officer, as such, past, present or future, of the Company or of any predecessor or successor corporation, either directly or through the Company or any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or by any legal or equitable proceeding or otherwise howsoever; all such liability being, by the acceptance hereof and as a part of the consideration for the issuance hereof, expressly waived and released by every registered owner hereof, as more fully provided in the Indenture; provided, however, that nothing herein or in the Indenture contained shall be taken to prevent recourse to and the enforcement of the liability, if any, of any shareholder or any stockholder or subscriber to capital stock upon or in respect of shares of capital stock not fully paid up. [END OF BOND FORM] SECTION 4. Anything contained in Sections 97 and 98 of the Indenture to the contrary notwithstanding, if less than all of the outstanding Bonds are to be called for redemption, the Bonds to be redeemed in whole or in part shall be designated by the Trustee (within 10 days after receipt from the Company of notice of its intention to redeem Bonds) by lot according to such method as the Trustee shall deem proper in its discretion. For the purpose of any drawing, the Trustee shall assign a number for each $1,000 principal amount of each outstanding Bond. The provisions of Section 97 of the Indenture relating to notations of partial redemption shall not apply to the Bonds. SECTION 5. The recitals contained in this Supplemental Indenture are made by the Company and not by the Trustee; and all of the provisions contained in the Original Indenture, as heretofore supplemented, in respect of the rights, privileges, immunities, powers, and duties of the Trustee shall, except as hereinabove modified, be applicable in respect hereof as fully and with like effect as if set forth herein in full. SECTION 6. All the covenants, stipulations, promises and agreements in this Supplemental Indenture contained, by or on behalf of the Company, shall bind and inure to the benefit of its successors and assigns, whether so expressed or not. SECTION 7. Nothing in this Supplemental Indenture expressed or implied is intended or shall be construed to give to any person other than the Company, the Trustee, and the holders of the first mortgage bonds any legal or equitable right, remedy or claim under or in respect of the Indenture or any covenant, condition or provision therein or in the first mortgage bonds contained, and all such covenants, conditions, and provisions are and shall be held to be for the sole and exclusive benefit of the Company, the Trustee and the holders of the first mortgage bonds issued under the Indenture. SECTION 8. All references in the Original Indenture to the various Sections and Articles thereof shall be deemed to refer to said Sections and Articles as heretofore amended, and the Original Indenture shall hereafter be construed and applied as heretofore amended and supplemented. SECTION 9. This Supplemental Indenture may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts, or as many of them as the Company and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. 3 IN WITNESS WHEREOF, IES UTILITIES INC. has caused this __________ Supplemental Indenture to be signed in its corporate name by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary, and THE FIRST NATIONAL BANK OF CHICAGO, in token of its acceptance of the trusts created hereunder, has caused this __________ Supplemental Indenture to be signed in its corporate name by one of its Vice Presidents or Assistant Vice Presidents and its corporate seal to be hereunto affixed and attested by one of its Trust Officers, all as of the day and year first above written. IES UTILITIES INC. By ------------------------- (CORPORATE SEAL) ATTEST: - - ------------------------- THE FIRST NATIONAL BANK OF CHICAGO, Trustee By ------------------------- (CORPORATE SEAL) ATTEST: - - -------------------------- 4 STATE OF IOWA ) ) ss: COUNTY OF LINN ) On this ___th day of _____, _____ before me, the undersigned, a Notary Public in and for the said County in the state aforesaid, personally appeared _________ and __________, to me personally known, and to me known to be _________, and __________ respectively, of IES UTILITIES INC., one of the corporations described in and which executed the within and foregoing instrument, and who, being by me severally duly sworn, each did say that he the said __________ is __________, and that he the said __________ is __________ of the said IES UTILITIES INC., a corporation; that the seal affixed to the within and foregoing instrument is the corporate seal of the said corporation, and that the said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors; and the said _________ and __________ each acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it voluntarily executed. WITNESS my hand and notarial seal this __th day of _____, ___. ------------------ Notary Public My Commission expires: (NOTARIAL SEAL) 5 STATE OF ILLINOIS ) ) ss COUNTY OF COOK ) On this ___th day of _____, _____, before me, the undersigned, a Notary Public in and for said County in the State aforesaid, personally appeared __________ and __________ to me personally known, and to me known to be a __________ and an _________, respectively, of THE FIRST NATIONAL BANK OF CHICAGO, one of the corporations described in and which executed the within and foregoing instrument, and who, being by me severally duly sworn, each did say that he the said _________ is a _________ that the said _________ is an __________ of the said THE FIRST NATIONAL BANK OF CHICAGO, a corporation; that the seal affixed to the within and foregoing instrument is the corporate seal of the said corporation, and that the said instrument was signed and sealed on behalf of said corporation by authority of its By-Laws; and the said __________ and __________ each acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it voluntarily executed. WITNESS my hand and notarial seal this ___th day of ____, ___. ------------------ Notary Public My Commission expires: (NOTARIAL SEAL) EX-4.J 7 INDENTURE 1 EXHIBIT 4(j) ------------------------------------------ IES UTILITIES INC. TO THE FIRST NATIONAL BANK OF CHICAGO Trustee --------- Indenture (For Senior Unsecured Debt Securities) Dated as of , 1997 ---------- ------------------------------------------ 2 TABLE OF CONTENTS
Page ---- RECITAL OF THE COMPANY...................................................... 1 ARTICLE ONE................................................................. 1 Definitions and Other Provisions of General Application..................... 1 SECTION 101. Definitions.......................................... 1 Act....................................................... 2 Affiliate................................................. 2 Authenticating Agent...................................... 2 Authorized Officer........................................ 2 Board of Directors........................................ 2 Board Resolution.......................................... 2 Business Day.............................................. 2 Commission................................................ 2 Company................................................... 2 Company Request or company order........................ 2 Corporate Trust Office.................................... 3 Defaulted Interest........................................ 3 Discount Security......................................... 3 Dollar or $............................................. 3 Eligible Obligations...................................... 3 Event of Default.......................................... 3 Governmental Authority.................................... 3 Government Obligations.................................... 3 Holder.................................................... 3 Indenture................................................. 4 Interest Payment Date..................................... 4 Lien...................................................... 4 Maturity ................................................. 4 Mortgages................................................. 4 Officer's Certificate..................................... 4 Opinion of Counsel........................................ 4 Outstanding............................................... 4 Paying Agent.............................................. 5 Periodic Offering......................................... 6 Permitted liens........................................... 6 Person.................................................... 7 Place of Payment.......................................... 8 Predecessor Security...................................... 8 Prepaid Lien.............................................. 8 Redemption Date........................................... 8 Redemption Price.......................................... 8 Regular Record Date....................................... 8 Required Currency......................................... 8 Responsible Officer....................................... 8 Securities................................................ 8 Security Register and security registrar................ 8 Special Record Date....................................... 8
3 Stated Interest Rate.......................................................................... 8 Stated Maturity............................................................................... 8 Tangible Net Worth............................................................................ 8 Tranche....................................................................................... 9 Trust Indenture Act........................................................................... 9 Trustee....................................................................................... 9 United States................................................................................. 9 SECTION 102. Compliance Certificates and Opinions..................................................... 9 SECTION 103. Form of Documents Delivered to Trustee................................................... 10 SECTION 104. Acts of Holders.......................................................................... 10 SECTION 105. Notices, Etc. to Trustee and Company..................................................... 12 SECTION 106. Notice to Holders of Securities; Waiver.................................................. 13 SECTION 107. Conflict with Trust Indenture Act........................................................ 13 SECTION 108. Effect of Headings and Table of Contents................................................. 13 SECTION 109. Successors and Assigns................................................................... 13 SECTION 110. Separability Clause...................................................................... 13 SECTION 111. Benefits of Indenture.................................................................... 13 SECTION 112. Governing Law............................................................................ 14 SECTION 113. Legal Holidays........................................................................... 14 ARTICLE TWO..................................................................................................... 14 Security Forms.................................................................................................. 14 SECTION 201. Forms Generally.......................................................................... 14 SECTION 202. Form of Trustee's Certificate of Authentication.......................................... 15 ARTICLE THREE................................................................................................... 15 The Securities.................................................................................................. 15 SECTION 301. Amount Unlimited; Issuable in Series..................................................... 15 SECTION 302. Denominations............................................................................ 18 SECTION 303. Execution, Authentication, Delivery and Dating........................................... 18 SECTION 304. Temporary Securities..................................................................... 20 SECTION 305. Registration, Registration of Transfer and Exchange...................................... 21 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities......................................... 22 SECTION 307. Payment of Interest; Interest Rights Preserved........................................... 23 SECTION 308. Persons Deemed Owners.................................................................... 24 SECTION 309. Cancellation by Security Registrar....................................................... 24 SECTION 310. Computation of Interest........................................................................... 24 SECTION 311. Payment to Be in Proper Currency......................................................... 25 SECTION 312. Extension of Interest Payment............................................................ 25 ARTICLE FOUR.................................................................................................... 25 Redemption of Securities........................................................................................ 25 SECTION 401. Applicability of Article................................................................. 25 SECTION 402. Election to Redeem; Notice to Trustee.................................................... 25 SECTION 403. Selection of Securities to Be Redeemed................................................... 26 SECTION 404. Notice of Redemption..................................................................... 26 SECTION 405. Securities Payable on Redemption Date.................................................... 27 SECTION 406. Securities Redeemed in Part.............................................................. 27 ARTICLE FIVE.................................................................................................... 28
4 Sinking Funds................................................................................................... 28 SECTION 501. Applicability of Article................................................................. 28 SECTION 502. Satisfaction of Sinking Fund Payments with Securities.................................... 28 SECTION 503. Redemption of Securities for Sinking Fund................................................ 29 ARTICLE SIX..................................................................................................... 29 Covenants....................................................................................................... 29 SECTION 601. Payment of Principal, Premium and Interest............................................... 29 SECTION 602. Maintenance of Office or Agency.......................................................... 29 SECTION 603. Money for Securities Payments to Be Held in Trust........................................ 30 SECTION 604. Corporate Existence...................................................................... 31 SECTION 605. Maintenance of Properties................................................................ 31 SECTION 606. Annual Officer's Certificate as to Compliance............................................ 32 SECTION 607. Waiver of Certain Covenants.............................................................. 32 SECTION 608. Limitations on Liens..................................................................... 32 ARTICLE SEVEN................................................................................................... 33 Satisfaction and Discharge...................................................................................... 33 SECTION 701. Satisfaction and Discharge of Securities................................................. 33 SECTION 702. Satisfaction and Discharge of Indenture.................................................. 35 SECTION 703. Application of Trust Money............................................................... 36 ARTICLE EIGHT................................................................................................... 37 Events of Default; Remedies..................................................................................... 37 SECTION 801. Events of Default........................................................................ 37 SECTION 802. Acceleration of Maturity; Rescission and Annulment....................................... 38 SECTION 803. Collection of Indebtedness and Suits for Enforcement by TRUSTEE.......................... 39 SECTION 804. Trustee May File Proofs of Claim......................................................... 39 SECTION 805. Trustee May Enforce Claims Without Possession of Securities.............................. 40 SECTION 806. Application of Money Collected........................................................... 40 SECTION 807. Limitation on Suits...................................................................... 40 SECTION 808. Unconditional Right of Holders to Receive Principal, Premium and Interest................ 41 SECTION 809. Restoration of Rights and Remedies....................................................... 41 SECTION 810. Rights and Remedies Cumulative........................................................... 41 SECTION 811. Delay or Omission Not Waiver............................................................. 42 SECTION 812. Control by Holders of Securities......................................................... 42 SECTION 813. Waiver of Past Defaults.................................................................. 42 SECTION 814. Undertaking for Costs.................................................................... 43 SECTION 815. Waiver of Stay or Extension Laws......................................................... 43 ARTICLE NINE.................................................................................................... 43 The Trustee..................................................................................................... 43 SECTION 901. Certain Duties and Responsibilities...................................................... 43 SECTION 902. Notice of Defaults....................................................................... 44 SECTION 903. Certain Rights of Trustee................................................................ 45 SECTION 904. Not Responsible for Recitals or Issuance of Securities................................... 46 SECTION 905. May Hold Securities...................................................................... 46 SECTION 906. Money Held in Trust...................................................................... 46 SECTION 907. Compensation and Reimbursement........................................................... 46 SECTION 908. Disqualification; Conflicting Interests.................................................. 47
5 SECTION 909. Corporate Trustee Required; Eligibility.................................................. 47 SECTION 910. Resignation and Removal; Appointment of Successor........................................ 48 SECTION 911. Acceptance of Appointment by Successor................................................... 49 SECTION 912. Merger, Conversion, Consolidation or Succession to Business.............................. 50 SECTION 913. Preferential Collection of Claims Against Company........................................ 50 SECTION 914. Co-trustees and Separate Trustees........................................................ 51 SECTION 915. Appointment of Authenticating Agent...................................................... 52 ARTICLE TEN..................................................................................................... 54 Holders' Lists and Reports by Trustee and Company............................................................... 54 SECTION 1001. Lists of Holders........................................................................ 54 SECTION 1002. Reports by Trustee and Company.......................................................... 54 ARTICLE ELEVEN.................................................................................................. 54 Consolidation, Merger, Conveyance or Other Transfer............................................................. 54 SECTION 1101. Company May Consolidate, Etc., Only on Certain Terms.................................... 54 SECTION 1102. Successor Corporation Substituted....................................................... 55 ARTICLE TWELVE.................................................................................................. 55 Supplemental Indentures......................................................................................... 55 SECTION 1201. Supplemental Indentures Without Consent of Holders...................................... 55 SECTION 1202. Supplemental Indentures With Consent of Holders......................................... 57 SECTION 1203. Execution of Supplemental Indentures.................................................... 58 SECTION 1204. Effect of Supplemental Indentures....................................................... 58 SECTION 1205. Conformity With Trust Indenture Act..................................................... 58 SECTION 1206. Reference in Securities to Supplemental Indentures...................................... 59 SECTION 1207. Modification Without Supplemental Indenture............................................. 59 ARTICLE THIRTEEN................................................................................................ 59 Meetings of Holders; Action Without Meeting..................................................................... 59 SECTION 1301. Purposes for Which Meetings May Be Called............................................... 59 SECTION 1302. Call, Notice and Place of Meetings...................................................... 59 SECTION 1303. Persons Entitled to Vote at Meetings.................................................... 60 SECTION 1304. Quorum; Action.......................................................................... 60 SECTION 1305. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings.............................................................. 61 SECTION 1306. Counting Votes and Recording Action of Meetings......................................... 62 SECTION 1307. Action Without Meeting.................................................................. 62 ARTICLE FOURTEEN................................................................................................ 62 Immunity of Incorporators, Stockholders, Officers and Directors................................................. 62 SECTION 1401. Liability Solely Corporate.............................................................. 62
6 INDENTURE, dated as of _____________, 1997 between IES UTILITIES INC., a corporation duly organized and existing under the laws of the State of Iowa (herein called the "Company"), having its principal office at 200 First Street S.E., Cedar Rapids, Iowa 52401, and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association organized and existing under the laws of the United States of America, having its principal corporate trust office at One First National Plaza, Suite 0126, Chicago, Illinois, 60670-0126, as Trustee (herein called the "Trustee"). RECITAL OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its senior unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as contemplated herein; and all acts necessary to make this Indenture a valid agreement of the Company have been performed. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used herein shall have the meanings assigned to them in Article One of this Indenture. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all terms used herein without definition which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States at the date of such computation or, at the election of the Company from time to time, at the date of the execution and delivery of this Indenture; provided, however, that in determining generally accepted accounting principles applicable to the Company, the Company shall, to the extent required, conform to any order, rule 1 7 or regulation of any administrative agency, regulatory authority or other governmental body having jurisdiction over the Company; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Nine, are defined in that Article. "ACT", when used with respect to any Holder of a Security, has the meaning specified in Section 104. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AUTHENTICATING AGENT" means any Person (other than the Company or an Affiliate of the Company) authorized by the Trustee to act on behalf of the Trustee to authenticate one or more series of Securities. "AUTHORIZED OFFICER" means the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer or any other duly authorized officer of the Company. "BOARD OF DIRECTORS" means either the board of directors of the Company or any committee thereof duly authorized to act in respect of matters relating to this Indenture. "BOARD RESOLUTION" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "BUSINESS DAY", when used with respect to a Place of Payment or any other particular location specified in the Securities or this Indenture, means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in such Place of Payment or other location are generally authorized or required by law, regulation or executive order to remain closed, except as may be otherwise specified as contemplated by Section 301. "COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the date of execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body, if any, performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order signed in the name of the Company by an Authorized Officer and delivered to the Trustee. "CORPORATE TRUST OFFICE" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution and delivery of this Indenture is located at One First National Plaza, Suite 0126, Chicago, Illinois, 60670-0126. 2 8 "CORPORATION" means a corporation, association, company, joint stock company or business trust. "DEFAULTED INTEREST" has the meaning specified in Section 307. "DISCOUNT SECURITY" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 802. "INTEREST" with respect to a Discount Security means interest, if any, borne by such Security at a Stated Interest Rate. "DOLLAR" or "$" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "ELIGIBLE OBLIGATIONS" means: (a) with respect to Securities denominated in Dollars, Government Obligations; or (b) with respect to Securities denominated in a currency other than Dollars or in a composite currency, such other obligations or instruments as shall be specified with respect to such Securities, as contemplated by Section 301. "EVENT OF DEFAULT" has the meaning specified in Section 801. "GOVERNMENTAL AUTHORITY" means the government of the United States or of any State or Territory thereof or of the District of Columbia or of any county, municipality or other political subdivision of any thereof, or any department, agency, authority or other instrumentality of any of the foregoing. "GOVERNMENT OBLIGATIONS" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States entitled to the benefit of the full faith and credit thereof; and (b) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (a) above or in any specific interest or principal payments due in respect thereof; provided, however, that the custodian of such obligations or specific interest or principal payments shall be a bank or trust company (which may include the Trustee or any Paying Agent) subject to Federal or state supervision or examination with a combined capital and surplus of at least $50,000,000; and provided, further, that except as may be otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates, depositary receipts or other instruments the full amount received by such custodian in respect of such obligations or specific payments and shall not be permitted to make any deduction therefrom. "HOLDER" means a Person in whose name a Security is registered in the Security Register. "INDENTURE" means this instrument as originally executed and delivered and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by Section 301. 3 9 "INTEREST PAYMENT DATE", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "LIEN" means any mortgage, pledge, security interest, encumbrance, easement, lease, reservation, restriction, servitude, charge, or similar right or lien of any kind, including, without limitation, any conditional sale of other title retention agreement, any lease in the nature thereof, any filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any jurisdiction, and any defect or irregularity in record title. "MATURITY", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in such Security or in this Indenture, whether at the Stated Maturity, by declaration of acceleration, upon call for redemption or otherwise. "MORTGAGES" means (a) the Company's Indenture of Mortgage or Deed of Trust, dated as of August 1, 1940, to The First National Bank of Chicago, as Trustee, (b) the Iowa Southern Utilities Company (Company, as surviving obligor) Indenture or Deed of Trust, dated as of February 1, 1923, with The First National Bank of Chicago and Richard D. Manella, as successor Trustees and (c) the Company's Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, between the Company and The First National Bank of Chicago, as Trustee, in each case as heretofore or hereafter amended, modified and supplemented. "OFFICER'S CERTIFICATE" means a certificate signed by an Authorized Officer and delivered to the Trustee. "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel for the Company, or other counsel acceptable to the Trustee. "OUTSTANDING", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities deemed to have been paid in accordance with Section 701; and (c) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it and the Company that such Securities are held by a bona fide purchaser or purchasers in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether or not the Holders of the requisite principal amount of the Securities Outstanding under this Indenture, or the Outstanding Securities of any series or Tranche, have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether or not a quorum is present at a meeting of Holders of Securities, (x) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all Securities Outstanding under this Indenture, or all Outstanding Securities of 4 10 each such series and each such Tranche, as the case may be, determined without regard to this clause (x)) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded; provided, however, that Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor; (y) the principal amount of a Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 802; and (z) the principal amount of any Security which is denominated in a currency other than Dollars or in a composite currency that shall be deemed to be Outstanding for such purposes shall be the amount of Dollars which could have been purchased by the principal amount (or, in the case of a Discount Security, the Dollar equivalent on the date determined as set forth below of the amount determined as provided in (y) above) of such currency or composite currency evidenced by such Security, in each such case certified to the Trustee in an Officer's Certificate, based (1) on the average of the mean of the buying and selling spot rates quoted by three banks which are members of the New York Clearing House Association selected by the Company in effect at 11:00 A.M. (New York time) in The City of New York on the fifth Business Day preceding any such determination or (2) if on such fifth Business Day it shall not be possible or practicable to obtain such quotations from such three banks, on such other quotations or alternative methods of determination which shall be as consistent as practicable with the method set forth in (1) above; provided, further, that, in the case of any Security the principal of which is payable from time to time without presentment or surrender, the principal amount of such Security that shall be deemed to be Outstanding at any time for all purposes of this Indenture shall be the original principal amount thereof less the aggregate amount of principal thereof theretofore paid. "PAYING AGENT" means any Person, including the Company, authorized by the Company to pay the principal of and premium, if any, or interest, if any, on any Securities on behalf of the Company. "PERIODIC OFFERING" means an offering of Securities of a series from time to time any or all of the specific terms of which Securities, including without limitation the rate or rates of interest, if any, thereon, the Stated Maturity or Maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "PERMITTED LIENS" means, at any time, any of the following: (a) Liens for taxes, assessments and other governmental charges or requirements not delinquent or which can thereafter be paid without penalty or which are currently being contested in good faith by appropriate proceedings; 5 11 (b) mechanics', workmen's, repairmen's, materialmen's, warehousemen's and carriers' Liens, Liens or privileges of any employees of the Company for salary or wages earned, but not yet payable, and other Liens, including without limitation Liens for worker's compensation awards, arising in the ordinary course of business for charges or requirements which are not delinquent or which are being contested in good faith and by appropriate proceedings; (c) Liens in respect of judgments or awards with respect to which the Company shall (i) in good faith be prosecuting an appeal or other proceeding for review and with respect to which the Company shall have secured a stay of execution pending such appeal or other proceeding or (ii) have the right to prosecute an appeal or other proceeding for review; (d) easements, leases, reservations or other rights of others in, on and/or over, and laws, regulations and restrictions affecting, and defects and irregularities in record title to, the property of the Company or any part thereof; provided, however, that such easements, leases, reservations, rights, laws, regulations, restrictions, defects and irregularities do not, in the reasonable judgment of the Company, in the aggregate materially impair the use by the Company of its property considered as a whole for the purposes for which it is held by the Company; (e) any defects or irregularities in title to any rights-of-way and/or to any real estate used or to be used primarily for right-of-way purposes or held under lease, easement, license or similar right; provided, however, that (i) the Company shall have obtained from the apparent owner of the lands or estates therein covered by any such right-of-way a sufficient right, by the terms of the instrument granting such right-of-way, lease, easement, license or similar right, to the use thereof for the purpose for which the Company acquired the same, (ii) the Company has power under eminent domain, or similar statutes, to remove such defects or irregularities or (iii) such defects or irregularities may be otherwise remedied without undue effort or expense; (f) Liens securing indebtedness neither created, assumed nor guaranteed by the Company nor on account of which it customarily pays interest, existing at the date of the execution and delivery of this Indenture, or, as to property hereafter acquired, at the time of the acquisition thereof by the Company, upon real estate or rights in or relating to real estate acquired by the Company for rights of way for distribution and transmission lines and for pipes, substations, structures and appurtenances thereto; (g) leases existing at the date of the execution and delivery of this Indenture affecting property owned by the Company at said date and renewals and extensions thereof and leases for a term of not more than ten (10) years (including extensions or renewals at the option of the tenant) affecting property acquired by the Company after said date; (h) any controls, restrictions, obligations, duties and/or other burdens imposed by any federal, state, municipal or other law, or by any rule, regulation or order of any Governmental Authority, upon any property of the Company or the operation or use thereof or upon the Company with respect to any of its property or the operation or use thereof or with respect to any franchise, grant, license, permit or public purpose requirement, or any rights reserved to or otherwise vested in any Governmental Authority to impose any such controls, restrictions, obligations, duties and/or other burdens; 6 12 (i) Liens granted on air or water pollution control or sewage or solid waste disposal facilities of the Company in connection with the issuance of industrial development revenue bonds; (j) any right which any Governmental Authority may have by virtue of any franchise, license, contract or statute to purchase, or designate a purchaser of or order the sale of, any property of the Company upon payment of cash or reasonable compensation therefor or to terminate any franchise, license or other rights or to regulate the property and business of the Company; (k) any Liens which have been bonded for the full amount in dispute or for the payment of which other adequate security arrangements have been made or which, in the opinion of counsel, are not material; (l) Prepaid Liens; (m) Liens resulting from good faith deposits made in connection with bids, tenders, contracts or leases to which the Company is a party and Liens resulting from deposits made to secure public or statutory obligations of the Company or for the purpose of obtaining a stay or discharge in the course of any legal proceedings; (n) the pledge or assignment in the ordinary course of business of electricity, gas (either natural or artificial) or steam, accounts receivable or customers' installment paper; (o) rights reserved to or vested in others to take or receive any part of the electricity, gas (either natural or artificial), steam or any by-products thereof generated or produced by or from any properties of the Company or with respect to any other rights concerning electricity, gas (either natural or artificial) or steam supply, transportation, or storage which are in use in the ordinary course of the electricity, gas (either natural or artificial) or steam business; (p) any landlord's Lien; (q) Liens incurred pursuant to Section 907; and (r) Liens or encumbrances not otherwise permitted if, at the time of incurrence and after giving effect thereto, the aggregate of all obligations of the Company and its subsidiaries secured thereby does not exceed 10% of Tangible Net Worth. "PERSON" means any individual, corporation, partnership, joint venture, trust or unincorporated organization or any Governmental Authority thereof. "PLACE OF PAYMENT", when used with respect to the Securities of any series, or Tranche thereof, means the place or places, specified as contemplated by Section 301, at which, subject to Section 602, principal of and premium, if any, and interest, if any, on the Securities of such series or Tranche are payable. "PREDECESSOR SECURITY" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu 7 13 of a mutilated, destroyed, lost or stolen Security shall be deemed (to the extent lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "PREPAID LIEN" means any Lien securing indebtedness for the payment of which money in the necessary amount shall have been irrevocably deposited in trust with the trustee or other holder of such Lien; provided, however, that if such indebtedness is to be redeemed or otherwise prepaid prior to the stated maturity thereof, any notice requisite to such redemption or prepayment shall have been given in accordance with the mortgage or other instrument creating such Lien or irrevocable instructions to give such notice shall have been given to such trustee or other holder. "REDEMPTION DATE", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "REDEMPTION PRICE", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301. "REQUIRED CURRENCY" has the meaning specified in Section 311. "RESPONSIBLE OFFICER", when used with respect to the Trustee, means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "SECURITIES" has the meaning stated in the first recital of this Indenture and more particularly means any securities authenticated and delivered under this Indenture. "SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective meanings specified in Section 305. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the Securities of any series means a date fixed by the Trustee pursuant to Section 307. "STATED INTEREST RATE" means a rate (whether fixed or variable) at which an obligation by its terms is stated to bear simple interest. Any calculation or other determination to be made under this Indenture by reference to the Stated Interest Rate on a Security shall be made without regard to the effective interest cost to the Company of such Security and without regard to the Stated Interest Rate on, or the effective cost to the Company of, any other indebtedness the Company's obligations in respect of which are evidenced or secured in whole or in part by such Security. "STATED MATURITY", when used with respect to any obligation or any installment of principal thereof or interest thereon, means the date on which the principal of such obligation or such installment of principal or interest is stated to be due and payable (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension). "TANGIBLE NET WORTH" means (i) common stockholders' equity appearing on the most recent balance sheet of the Company (or consolidated balance sheet of the Company and its subsidiaries if the Company then has one or more subsidiaries the accounts of which are consolidated with the accounts of the Company) prepared in accordance with generally accepted accounting principles less (ii) intangible assets (excluding intangible assets recoverable through rates as prescribed by applicable regulatory authorities). 8 14 "TRANCHE" means a group of Securities which (a) are of the same series and (b) have identical terms except as to principal amount and/or date of issuance. "TRUST INDENTURE ACT" means, as of any time, the Trust Indenture Act of 1939, or any successor statute, as in effect at such time. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "UNITED STATES" means the United States of America, its Territories, its possessions and other areas subject to its political jurisdiction. SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Except as otherwise expressly provided in this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 9 15 Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such Officer's Certificate or opinion are based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer's Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally filed in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Anything in this Indenture to the contrary notwithstanding, if any such corrective document or instrument indicates that action has been taken by or at the request of the Company which could not have been taken had the original document or instrument not contained such error or omission, the action so taken shall not be invalidated or otherwise rendered ineffective but shall be and remain in full force and effect, except to the extent that such action was a result of willful misconduct or bad faith. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities, except as aforesaid. SECTION 104. ACTS OF HOLDERS. (a) Any request, demand, authorization, direction, notice, consent, election, waiver or other action provided by this Indenture to be made, given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing or, alternatively, may be embodied in and evidenced by the record of Holders voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders duly called and held in accordance with the provisions of Article Thirteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 901) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders shall be proved in the manner provided in Section 1306. 10 16 (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof or may be proved in any other manner which the Trustee and the Company deem sufficient. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The principal amount (except as otherwise contemplated in clause (y) of the proviso to the definition of Outstanding) and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (e) Until such time as written instruments shall have been delivered to the Trustee with respect to the requisite percentage of principal amount of Securities for the action contemplated by such instruments, any such instrument executed and delivered by or on behalf of a Holder may be revoked with respect to any or all of such Securities by written notice by such Holder or any subsequent Holder, proven in the manner in which such instrument was proven. (f) Securities of any series, or any Tranche thereof, authenticated and delivered after any Act of Holders may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any action taken by such Act of Holders. If the Company shall so determine, new Securities of any series, or any Tranche thereof, so modified as to conform, in the opinion of the Trustee and the Company, to such action may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series or Tranche. (g) If the Company shall solicit from Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by Company Order, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of the record date. SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY. Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Trustee by any Holder or by the Company, or the Company by the Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein 11 17 expressly provided) if in writing and delivered personally to an officer or other responsible employee of the addressee, or transmitted by facsimile transmission, telex or other direct written electronic means to such telephone number or other electronic communications address as the parties hereto shall from time to time designate, or transmitted by registered mail, charges prepaid, to the applicable address set opposite such party's name below or to such other address as either party hereto may from time to time designate: If to the Trustee, to: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Services Division Telephone: (312) 407-1895 Telecopy: (312) 407-1078 If to the Company, to: IES Utilities Inc. IES Tower 200 First Street S.E. Cedar Rapids, Iowa 52401 Attention: General Counsel Telephone: (319) 398-8147 Telecopy: (319) 398-4533 Any communication contemplated herein shall be deemed to have been made, given, furnished and filed if personally delivered, on the date of delivery, if transmitted by facsimile transmission, telex or other direct written electronic means, on the date of transmission, and if transmitted by certified or registered mail, on the date of receipt. SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given, and shall be deemed given, to Holders if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice required by this Indenture may be waived in writing by the Person entitled to receive such notice, either before or after the event otherwise to be specified therein, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the 12 18 Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision of this Indenture limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this Indenture by, or is otherwise governed by, any of the provisions of the Trust Indenture Act, such other provision shall control; and if any provision hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall control. SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings in this Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company and Trustee shall bind their respective successors and assigns, whether so expressed or not. SECTION 110. SEPARABILITY CLAUSE. In case any provision in this Indenture or the Securities shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. GOVERNING LAW. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, except to the extent that the law of any other jurisdiction shall be mandatorily applicable. SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities other than a provision in Securities of any series, or any Tranche thereof, or in the Board Resolution or Officer's Certificate which establishes the terms of the Securities of such series or Tranche, which specifically states that such provision shall apply in lieu of this Section) payment of interest or principal and premium, if any, need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment, except that if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on the amount 13 19 so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to such Business Day. ARTICLE TWO SECURITY FORMS SECTION 201. FORMS GENERALLY. The definitive Securities of each series shall be in substantially the form or forms thereof established in the indenture supplemental hereto establishing such series or in a Board Resolution establishing such series, or in an Officer's Certificate pursuant to such supplemental indenture or Board Resolution, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form or forms of Securities of any series are established in a Board Resolution or in an Officer's Certificate pursuant to a Board Resolution, such Board Resolution and Officer's Certificate, if any, shall be delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. Unless otherwise specified as contemplated by Sections 301 or 1201 (g), the Securities of each series shall be issuable in registered form without coupons. The definitive Securities shall be produced in such manner as shall be determined by the officers executing such Securities, as evidenced by their execution thereof. SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication shall be in substantially the form set forth below: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. ___________________________________ ___________, Trustee By: _______________________________ Authorized Officer ARTICLE THREE 14 20 THE SECURITIES SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. Prior to the authentication and delivery of Securities of any series there shall be established by specification in a supplemental indenture or in a Board Resolution, or in an Officer's Certificate pursuant to a supplemental indenture or a Board Resolution: (a) the title of the Securities of such series (which shall distinguish the Securities of such series from Securities of all other series); (b) any limit upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 304, 305, 306, 406 or 1206 and, except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (c) the Person or Persons (without specific identification) to whom interest on Securities of such series, or any Tranche thereof, shall be payable on any Interest Payment Date, if other than the Persons in whose names such Securities (or one or more Predecessor Securities) are registered at the close of business on the Regular Record Date for such interest; (d) the date or dates on which the principal of the Securities of such series, or any Tranche thereof, is payable or any formula or other method or other means by which such date or dates shall be determined, by reference to an index or other fact or event ascertainable outside of this Indenture or otherwise (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension); (e) the rate or rates at which the Securities of such series, or any Tranche thereof, shall bear interest, if any (including the rate or rates at which overdue principal shall bear interest, if different from the rate or rates at which such Securities shall bear interest prior to Maturity, and, if applicable, the rate or rates at which overdue premium or interest shall bear interest, if any), or any formula or other method or other means by which such rate or rates shall be determined, by reference to an index or other fact or event ascertainable outside of this Indenture or otherwise; the date or dates from which such interest shall accrue; the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on such Securities on any Interest Payment Date; the right of the Company, if any, to extend the interest payment periods and the duration of any such extension as contemplated by Section 312; and the basis of computation of interest, if other than as provided in Section 310; (f) the place or places at which or methods by which (1) the principal of and premium, if any, and interest, if any, on Securities of such series, or any Tranche thereof, shall be payable, (2) registration of transfer of Securities of such series, or any Tranche thereof, may be effected, (3) exchanges of Securities of such series, or any Tranche thereof, may be effected and (4) notices and demands to or upon the Company in respect of the 15 21 Securities of such series, or any Tranche thereof, and this Indenture may be served; the Security Registrar and any Paying Agent or Agents for such series or Tranche; and if such is the case, that the principal of such Securities shall be payable without presentment or surrender thereof; (g) the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which the Securities of such series, or any Tranche thereof, may be redeemed, in whole or in part, at the option of the Company and any restrictions on such redemptions, including but not limited to a restriction on a partial redemption by the Company of the Securities of any series, or any Tranche thereof, resulting in delisting of such Securities from any national exchange; (h) the obligation or obligations, if any, of the Company to redeem or purchase the Securities of such series, or any Tranche thereof, pursuant to any sinking fund or other mandatory redemption provisions or at the option of a Holder thereof and the period or periods within which or the date or dates on which, the price or prices at which and the terms and conditions upon which such Securities shall be redeemed or purchased, in whole or in part, pursuant to such obligation, and applicable exceptions to the requirements of Section 404 in the case of mandatory redemption or redemption at the option of the Holder; (i) the denominations in which Securities of such series, or any Tranche thereof, shall be issuable if other than denominations of $1,000 and any integral multiple thereof; (j) the currency or currencies, including composite currencies, in which payment of the principal of and premium, if any, and interest, if any, on the Securities of such series, or any Tranche thereof, shall be payable (if other than in Dollars); (k) if the principal of or premium, if any, or interest, if any, on the Securities of such series, or any Tranche thereof, are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (l) if the principal of or premium, if any, or interest, if any, on the Securities of such series, or any Tranche thereof, are to be payable, or are to be payable at the election of the Company or a Holder thereof, in securities or other property, the type and amount of such securities or other property, or the formulary or other method or other means by which such amount shall be determined, and the period or periods within which, and the terms and conditions upon which, any such election may be made; (m) if the amount payable in respect of principal of or premium, if any, or interest, if any, on the Securities of such series, or any Tranche thereof, may be determined with reference to an index or other fact or event ascertainable outside of this Indenture, the manner in which such amounts shall be determined to the extent not established pursuant to clause (e) of this paragraph; (n) if other than the principal amount thereof, the portion of the principal amount of Securities of such series, or any Tranche thereof, which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 802; (o) any Events of Default, in addition to those specified in Section 801, with respect to the Securities of such series, and any covenants of the Company for the benefit of the 16 22 Holders of the Securities of such series, or any Tranche thereof, in addition to those set forth in Article Six; (p) the terms, if any, pursuant to which the Securities of such series, or any Tranche thereof, may be converted into or exchanged for shares of capital stock or other securities of the Company or any other Person; (q) the obligations or instruments, if any, which shall be considered to be Eligible Obligations in respect of the Securities of such series, or any Tranche thereof, denominated in a currency other than Dollars or in a composite currency, and any additional or alternative provisions for the reinstatement of the Company's indebtedness in respect of such Securities after the satisfaction and discharge thereof as provided in Section 701; (r) if the Securities of such series, or any Tranche thereof, are to be issued in global form, (1) any limitations on the rights of the Holder or Holders of such Securities to transfer or exchange the same or to obtain the registration of transfer thereof, (2) any limitations on the rights of the Holder or Holders thereof to obtain certificates therefor in definitive form in lieu of temporary form and (3) any and all other matters incidental to such Securities; (s) if the Securities of such series, or any Tranche thereof, are to be issuable as bearer securities, any and all matters incidental thereto which are not specifically addressed in a supplemental indenture as contemplated by clause (g) of Section 1201; (t) to the extent not established pursuant to clause (r) of this paragraph, any limitations on the rights of the Holders of the Securities of such Series, or any Tranche thereof, to transfer or exchange such Securities or to obtain the registration of transfer thereof; and if a service charge will be made for the registration of transfer or exchange of Securities of such series, or any Tranche thereof, the amount or terms thereof; (u) any exceptions to Section 113, or variation in the definition of Business Day, with respect to the Securities of such series, or any Tranche thereof; and (v) any other terms of the Securities of such series, or any Tranche thereof, not inconsistent with the provisions of this Indenture. With respect to Securities of a series subject to a Periodic Offering, the indenture supplemental hereto or the Board Resolution which establishes such series, or the Officer's Certificate pursuant to such supplemental indenture or Board Resolution, as the case may be, may provide general terms or parameters for Securities of such series and provide either that the specific terms of Securities of such series, or any Tranche thereof, shall be specified in a Company Order or that such terms shall be determined by the Company or its agents in accordance with procedures specified in a Company Order as contemplated by clause (b) of Section 303. SECTION 302. DENOMINATIONS. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, or any Tranche thereof, the Securities of each series shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. 17 23 Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, or any Tranche thereof, the Securities shall be executed on behalf of the Company by an Authorized Officer and may have the corporate seal of the Company affixed thereto or reproduced thereon and attested by any other Authorized Officer. The signature of any or all of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at the time of execution Authorized Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. The Trustee shall authenticate and deliver Securities of a series, for original issue, at one time or from time to time in accordance with the Company Order referred to below, upon receipt by the Trustee of: (a) the instrument or instruments establishing the form or forms and terms of such series, as provided in Sections 201 and 301; (b) a Company Order requesting the authentication and delivery of such Securities and, to the extent that the terms of such Securities shall not have been established in an indenture supplemental hereto or in a Board Resolution, or in an Officer's Certificate pursuant to a supplemental indenture or Board Resolution, all as contemplated by Sections 201 and 301, either (1) establishing such terms or (2) in the case of Securities of a series subject to a Periodic Offering, specifying procedures, acceptable to the Trustee, by which such terms are to be established (which procedures may provide, to the extent acceptable to the Trustee, for authentication and delivery pursuant to oral or electronic instructions from the Company or any agent or agents thereof, which oral instructions are to be promptly confirmed electronically or in writing), in either case in accordance with the instrument or instruments delivered pursuant to clause (a) above; (c) the Securities of such series, executed on behalf of the Company by an Authorized Officer; (d) an Opinion of Counsel to the effect that: (1) the form or forms of such Securities have been duly authorized by the Company and have been established in conformity with the provisions of this Indenture; (2) the terms of such Securities have been duly authorized by the Company and have been established in conformity with the provisions of this Indenture; and (3) such Securities, when authenticated and delivered by the Trustee and issued and delivered by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture and will constitute valid and legally binding obligations of the Company, entitled to the benefits provided by this Indenture, and enforceable in accordance with their terms, subject, as to enforcement, to laws relating to or affecting generally the enforcement of creditors' rights, including, without limitation, bankruptcy and insolvency laws and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); 18 24 provided, however, that, with respect to Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to receive such Opinion of Counsel only once at or prior to the time of the first authentication of such Securities (provided that such Opinion of Counsel addresses the authentication and delivery of all Securities of such series) and that in lieu of the opinions described in clauses (2) and (3) above Counsel may opine that: (x) when the terms of such Securities shall have been established pursuant to a Company Order or Orders or pursuant to such procedures (acceptable to the Trustee) as may be specified from time to time by a Company Order or Orders, all as contemplated by and in accordance with the instrument or instruments delivered pursuant to clause (a) above, such terms will have been duly authorized by the Company and will have been established in conformity with the provisions of this Indenture; and (y) such Securities, when authenticated and delivered by the Trustee in accordance with this Indenture and the Company Order or Orders or specified procedures referred to in paragraph (x) above and issued and delivered by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture and will constitute valid and legally binding obligations of the Company, entitled to the benefits provided by the Indenture, and enforceable in accordance with their terms, subject, as to enforcement, to laws relating to or affecting generally the enforcement of creditors' rights, including, without limitation, bankruptcy and insolvency laws, and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). With respect to Securities of a series subject to a Periodic Offering, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and other documents delivered pursuant to Sections 201 and 301 and this Section, as applicable, at or prior to the time of the first authentication of Securities of such series unless and until such opinion or other documents have been superseded or revoked or expire by their terms. In connection with the authentication and delivery of Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to assume that the Company's instructions to authenticate and deliver such Securities do not violate any rules, regulations or orders of any Governmental Authority having jurisdiction over the Company. If the form or terms of the Securities of any series have been established by or pursuant to a Board Resolution or an Officer's Certificate as permitted by Sections 201 or 301, the Trustee shall not be required to authenticate such Securities if the issuance of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, or any Tranche thereof, each Security shall be dated the date of its authentication. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, or any Tranche thereof, no Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or its agent by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder to the Company, or any Person acting on its behalf, but shall never have been 19 25 issued and sold by the Company, and the Company shall deliver such Security to the Security Registrar for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Officer's Certificate and an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits hereof. SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive Securities of any series, or any Tranche thereof, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities; provided, however, that temporary Securities need not recite specific redemption, sinking fund, conversion or exchange provisions. Unless otherwise specified as contemplated by Section 301 with respect to the Securities of any series, or any Tranche thereof, after the preparation of definitive Securities of such series or Tranche, the temporary Securities of such series or Tranche shall be exchangeable, without charge to the Holder thereof, for definitive Securities of such series or Tranche upon surrender of such temporary Securities at the office or agency of the Company maintained pursuant to Section 602 in a Place of Payment for such Securities. Upon such surrender of temporary Securities, the Company shall, except as aforesaid, execute and the Trustee shall authenticate and deliver in exchange therefor definitive Securities of the same series and Tranche, of authorized denominations and of like tenor and aggregate principal amount. Until exchanged in full as hereinabove provided, temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and Tranche and of like tenor authenticated and delivered hereunder. SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The Company shall cause to be kept in each office designated pursuant to Section 602, with respect to the Securities of each series or any Tranche thereof, a register (all registers kept in accordance with this Section being collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities of such series or Tranche and the registration of transfer thereof. The Company shall designate one Person to maintain the Security Register for the Securities of each series on a consolidated basis, and such Person is referred to herein, with respect to such series, as the "Security Registrar." Anything herein to the contrary notwithstanding, the Company may designate one or more of its offices as an office in which a register with respect to the Securities of one or more series, or any Tranche or Tranches thereof, shall be maintained, and the Company may designate itself the Security Registrar with respect to one or more of such series. The Security Register shall be open for inspection by the Trustee and the Company at all reasonable times. Except as otherwise specified as contemplated by Section 301 with respect to the Securities of any series, or any Tranche thereof, upon surrender for registration of transfer of any Security of such series or Tranche at the office or agency of the Company maintained pursuant to Section 602 in a Place of Payment for such series or Tranche, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or 20 26 more new Securities of the same series and Tranche, of authorized denominations and of like tenor and aggregate principal amount. Except as otherwise specified as contemplated by Section 301 with respect to the Securities of any series, or any Tranche thereof, any Security of such series or Tranche may be exchanged at the option of the Holder, for one or more new Securities of the same series and Tranche, of authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities delivered upon any registration of transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Trustee or the Security Registrar) be duly endorsed or shall be accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee or the Security Registrar, as the case may be, duly executed by the Holder thereof or his attorney duly authorized in writing. Unless otherwise specified as contemplated by Section 301 with respect to Securities of any series, or any Tranche thereof, no service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 406 or 1206 not involving any transfer. The Company shall not be required to execute or to provide for the registration of transfer of or the exchange of (a) Securities of any series, or any Tranche thereof, during a period of 15 days immediately preceding the date notice is to be given identifying the serial numbers of the Securities of such series or Tranche called for redemption or (b) any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and Tranche, and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the ownership of and the destruction, loss or theft of any Security and (b) such security or indemnity as may be reasonably required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security is held by a Person purporting to be the owner of such Security, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and Tranche, and of like tenor and principal amount and bearing a number not contemporaneously outstanding. 21 27 Notwithstanding the foregoing, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone other than the Holder of such new Security, and any such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of such series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Unless otherwise specified as contemplated by Section 301 with respect to the Securities of any series, or any Tranche thereof, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Subject to Section 312, any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the related Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a date (herein called a "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall promptly cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at the address of such Holder as it appears in the Security 22 28 Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date. (b) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and premium, if any, and (subject to Sections 305 and 307) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. CANCELLATION BY SECURITY REGISTRAR. All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Security Registrar, be delivered to the Security Registrar and, if not theretofore canceled, shall be promptly canceled by the Security Registrar. The Company may at any time deliver to the Security Registrar for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever or which the Company shall not have issued and sold, and all Securities so delivered shall be promptly canceled by the Security Registrar. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Security Registrar shall be disposed of in accordance with a Company Order delivered to the Security Registrar and the Trustee, and the Security Registrar shall promptly deliver a certificate of disposition to the Trustee and the Company unless, by a Company Order, similarly delivered, the Company shall direct that canceled Securities be returned to it. The Security Registrar shall promptly deliver evidence of any cancellation of a Security in accordance with this Section 309 to the Trustee and the Company. SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified as contemplated by Section 301 for Securities of any series, or any Tranche thereof, interest on the Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months and on the basis of the actual number of days elapsed within any month in relation to the deemed 30 days of such month. 23 29 SECTION 311. PAYMENT TO BE IN PROPER CURRENCY. In the case of the Securities of any series, or any Tranche thereof, denominated in any currency other than Dollars or in a composite currency (the "Required Currency"), except as otherwise specified with respect to such Securities as contemplated by Section 301, the obligation of the Company to make any payment of the principal thereof, or the premium, if any, or interest, if any, thereon, shall not be discharged or satisfied by any tender by the Company, or recovery by the Trustee, in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the Trustee timely holding the full amount of the Required Currency then due and payable. If any such tender or recovery is in a currency other than the Required Currency, the Trustee may take such actions as it considers appropriate to exchange such currency for the Required Currency. The costs and risks of any such exchange, including without limitation the risks of delay and exchange rate fluctuation, shall be borne by the Company, the Company shall remain fully liable for any shortfall or delinquency in the full amount of Required Currency then due and payable, and in no circumstances shall the Trustee be liable therefor except in the case of its negligence or willful misconduct. SECTION 312. EXTENSION OF INTEREST PAYMENT. The Company shall have the right at any time, so long as the Company is not in default in the payment of interest on the Securities of any series hereunder, to extend interest payment periods on all Securities of one or more series, or Tranches thereof, if so specified as contemplated by Section 301 with respect to such Securities and upon such terms as may be specified as contemplated by Section 301 with respect to such Securities. ARTICLE FOUR REDEMPTION OF SECURITIES SECTION 401. APPLICABILITY OF ARTICLE. Securities of any series, or any Tranche thereof, which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of such series or Tranche) in accordance with this Article. SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or an Officer's Certificate. The Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of such Securities to be redeemed. In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officer's Certificate evidencing compliance with such restriction or condition. SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED. 24 30 If less than all the Securities of any series, or any Tranche thereof, are to be redeemed, the particular Securities to be redeemed shall be selected by the Security Registrar from the Outstanding Securities of such series or Tranche not previously called for redemption, by such method as shall be provided for any particular series or Tranche, or, in the absence of any such provision, by such method of random selection as the Security Registrar shall deem fair and appropriate and which may, in any case, provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of such series or Tranche or any integral multiple thereof) of the principal amount of Securities of such series or Tranche of a denomination larger than the minimum authorized denomination for Securities of such series or Tranche; provided, however, that if, as indicated in an Officer's Certificate, the Company shall have offered to purchase all or any principal amount of the Securities then Outstanding of any series, or any Tranche thereof, and less than all of such Securities as to which such offer was made shall have been tendered to the Company for such purchase, the Security Registrar, if so directed by Company Order, shall select for redemption all or any principal amount of such Securities which have not been so tendered. The Security Registrar shall promptly notify the Company and the Trustee in writing of the Securities selected for redemption and, in the case of any Securities selected to be redeemed in part, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 404. NOTICE OF REDEMPTION. Notice of redemption shall be given in the manner provided in Section 106 to the Holders of the Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date. All notices of redemption shall state: (a) the Redemption Date, (b) the Redemption Price, (c) if less than all the Securities of any series or Tranche are to be redeemed, the identification of the particular Securities to be redeemed and the portion of the principal amount of any Security to be redeemed in part, (d) that on the Redemption Date the Redemption Price, together with accrued interest, if any, to the Redemption Date, will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price and accrued interest, if any, unless it shall have been specified as contemplated by Section 301 with respect to such Securities that such surrender shall not be required, (f) that the redemption is for a sinking or other fund, if such is the case, and 25 31 (g) such other matters as the Company shall deem desirable or appropriate. Unless otherwise specified with respect to any Securities in accordance with Section 301, with respect to any notice of redemption of Securities at the election of the Company, unless, upon the giving of such notice, such Securities shall be deemed to have been paid in accordance with Section 701, such notice may state that such redemption shall be conditional upon the receipt by the Paying Agent or Agents for such Securities, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Securities and that if such money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such Securities. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and within a reasonable time thereafter notice shall be given, in the manner in which the notice of redemption was given, that such money was not so received and such redemption was not required to be made, and the Paying Agent or Agents for the Securities otherwise to have been redeemed shall promptly return to the Holders thereof any of such Securities which had been surrendered for payment upon such redemption. Notice of redemption of Securities to be redeemed at the election of the Company, and any notice of non-satisfaction of a condition for redemption as aforesaid, shall be given by the Company or, at the Company's request, by the Security Registrar in the name and at the expense of the Company. Notice of mandatory redemption of Securities shall be given by the Security Registrar in the name and at the expense of the Company. SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Securities or portions thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless, in the case of an unconditional notice of redemption, the Company shall default in the payment of the Redemption Price and accrued interest, if any) such Securities or portions thereof, if interest-bearing, shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with such notice, such Security or portion thereof shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that no such surrender shall be a condition to such payment if so specified as contemplated by Section 301 with respect to such Security; and provided, further, that except as otherwise specified as contemplated by Section 301 with respect to such Security, any installment of interest on any Security the Stated Maturity of which installment is on or prior to the Redemption Date shall be payable to the Holder of such Security, or one or more Predecessor Securities, registered as such at the close of business on the related Regular Record Date according to the terms of such Security and subject to the provisions of Section 307. SECTION 406. SECURITIES REDEEMED IN PART. Upon the surrender of any Security which is to be redeemed only in part at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities of the same series and Tranche, of any authorized denomination requested by such Holder and of like tenor and in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. 26 32 ARTICLE FIVE SINKING FUNDS SECTION 501. APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of any series, or any Tranche thereof, except as otherwise specified as contemplated by Section 301 for Securities of such series or Tranche. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series, or any Tranche thereof, is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series, or any Tranche thereof, is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, or any Tranche thereof, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 502. Each sinking fund payment shall be applied to the redemption of Securities of the series or Tranche in respect of which it was made as provided for by the terms of such Securities. SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES. The Company (a) may deliver to the Trustee Outstanding Securities (other than any previously called for redemption) of a series or Tranche in respect of which a mandatory sinking fund payment is to be made and (b) may apply as a credit Securities of such series or Tranche which have been (1) redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities or (2) repurchased by the Company in the open market, by tender offer or otherwise, in each case in satisfaction of all or any part of such mandatory sinking fund payment; provided, however, that no Securities shall be applied in satisfaction of a mandatory sinking fund payment if such Securities shall have been previously so applied. Securities so applied shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly. SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than 45 days prior to each sinking fund payment date for the Securities of any series, or any Tranche thereof, the Company shall deliver to the Trustee an Officer's Certificate specifying: (a) the amount of the next succeeding mandatory sinking fund payment for such series or Tranche; (b) the amount, if any, of the optional sinking fund payment to be made together with such mandatory sinking fund payment; (c) the aggregate sinking fund payment; 27 33 (d) the portion, if any, of such aggregate sinking fund payment which is to be satisfied by the payment of cash; (e) the portion, if any, of such aggregate sinking fund payment which is to be satisfied by delivering and crediting Securities of such series or Tranche pursuant to Section 502 and stating the basis for such credit and that such Securities have not previously been so credited, and the Company shall also deliver to the Trustee any Securities to be so delivered. If the Company shall not deliver such Officer's Certificate, the next succeeding sinking fund payment for such series or Tranche shall be made entirely in cash in the amount of the mandatory sinking fund payment. Not less than 40 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 403 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 404. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 405 and 406. ARTICLE SIX COVENANTS SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company shall pay the principal of and premium, if any, and interest, if any, on the Securities of each series in accordance with the terms of such Securities and this Indenture. SECTION 602. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in each Place of Payment for the Securities of each series, or any Tranche thereof, an office or agency where payment of such Securities shall be made, where the registration of transfer or exchange of such Securities may be effected and where notices and demands to or upon the Company in respect of such Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency and prompt notice to the Holders of any such change in the manner specified in Section 106. If at any time the Company shall fail to maintain any such required office or agency in respect of Securities of any series, or any Tranche thereof, or shall fail to furnish the Trustee with the address thereof, payment of such Securities shall be made, registration of transfer or exchange thereof may be effected and notices and demands in respect thereof may be served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent for all such purposes in any such event. The Company may also from time to time designate one or more other offices or agencies with respect to the Securities of one or more series, or any Tranche thereof, for any or all of the foregoing purposes and may from time to time rescind such designations; provided, however, that, unless otherwise specified as contemplated by Section 301 with respect to the Securities of such series or Tranche, no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes in each Place of Payment for such Securities in accordance with the requirements set forth above. The Company shall give prompt written notice to the Trustee, and prompt notice to the Holders in the manner specified in Section 106, of any such designation or rescission and of any change in the location of any such other office or agency. 28 34 Anything herein to the contrary notwithstanding, any office or agency required by this Section may be maintained at an office of the Company, in which event the Company shall perform all functions to be performed at such office or agency. SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent with respect to the Securities of any series, or any Tranche thereof, it shall, on or before each due date of the principal of and premium, if any, and interest, if any, on any of such Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided. The Company shall promptly notify the Trustee of any failure by the Company (or any other obligor on such Securities) to make any payment of principal of or premium, if any, or interest, if any, on such Securities. Whenever the Company shall have one or more Paying Agents for the Securities of any series, or any Tranche thereof, it shall, on or before each due date of the principal of and premium, if any, and interest, if any, on such Securities, deposit with such Paying Agents sums sufficient (without duplication) to pay the principal and premium or interest so becoming due, such sums to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of any failure by it so to act. The Company shall cause each Paying Agent for the Securities of any series, or any Tranche thereof, other than the Company or the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall: (a) hold all sums held by it for the payment of the principal of and premium, if any, or interest, if any, on such Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any failure by the Company (or any other obligor upon such Securities) to make any payment of principal of or premium, if any, or interest, if any, on such Securities; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent and furnish to the Trustee such information as it possesses regarding the names and addresses of the Persons entitled to such sums. The Company may at any time pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent and, if so stated in a Company Order delivered to the Trustee, in accordance with the provisions of Article Seven; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and premium, if any, or interest, if any, on any Security and remaining unclaimed for two years after such principal and premium, if any, or interest, 29 35 if any, has become due and payable shall be paid to the Company on Company Request, or, if then held by the Company, shall be discharged from such trust; and, upon such payment or discharge, the Holder of such Security shall, as an unsecured general creditor and not as a Holder of an Outstanding Security, look only to the Company for payment of the amount so due and payable and remaining unpaid, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment to the Company, may at the expense of the Company cause to be mailed, on one occasion only, notice to such Holder that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be paid to the Company. SECTION 604. CORPORATE EXISTENCE. Subject to the rights of the Company under Article Eleven, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 605. MAINTENANCE OF PROPERTIES. The Company shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith may be properly conducted; provided, however, that nothing in this Section shall prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE. Not later than October 1 in each year, commencing October 1, 1997, the Company shall deliver to the Trustee an Officer's Certificate which need not comply with Section 102, executed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company, as to such officer's knowledge of the Company's compliance with all conditions and covenants under this Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under this Indenture. SECTION 607. WAIVER OF CERTAIN COVENANTS. The Company may omit in any particular instance to comply with any term, provision or condition set forth in (a) Section 602 or any additional covenant or restriction specified with respect to the Securities of any series, or any Tranche thereof, as contemplated by Section 301 if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Outstanding Securities of all series and Tranches with respect to which compliance with Section 602 or such additional covenant or restriction is to be omitted, considered as one class, shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition and (b) Section 604, 605 or Article Eleven if before the time for such compliance the Holders of at least a majority in principal amount of Securities Outstanding under this Indenture shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition; but, in the case of (a) or (b), no such waiver 30 36 shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. SECTION 608. LIMITATIONS ON LIENS. So long as there remain outstanding any Securities of any series to which this Section 608 applies under the terms of the series, the Company shall not, and will not permit any subsidiary to, create or suffer to be created or to exist any Lien on any of its properties or assets now owned or hereinafter acquired to secure any indebtedness, without making effective provision whereby the Securities (together with, if the Company shall so determine, any other debt of the Company or any subsidiary then existing or thereafter created that is not subordinate to such Securities) of such series shall be equally and ratably secured with (or prior to) any and all such indebtedness and with any other indebtedness similarly entitled to be equally and ratably secured. However, this restriction shall not apply to or prevent the creation or existence of: (a) the Liens of the Mortgages or any indenture supplemental to any thereof subjecting any property to the Lien thereof or confirming the Lien thereof upon any property, whether now owned or hereafter acquired; (b) Liens on property existing at the time of acquisition or construction of such property (or created within one year after completion of such acquisition or construction), whether by purchase, merger,construction or otherwise (or on the property of a subsidiary at the date it became a subsidiary), or to secure the payment of all or any part of the purchase price or construction cost thereof, including the extension of any such Liens to repairs, renewals, replacements, substitutions, betterments, additions, extensions and improvements then or thereafter made on the property subject thereto; (c) any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part of Liens permitted by the foregoing clauses (a) and (b); (d) the pledge of any bonds or other securities at any time issued under any of the Liens permitted by clauses (a), (b), or (c); or (e) Permitted Liens. Further, this restriction shall not apply to or prevent the creation or existence of leases made, or existing on property acquired, in the ordinary course of business. ARTICLE SEVEN SATISFACTION AND DISCHARGE SECTION 701. SATISFACTION AND DISCHARGE OF SECURITIES. Any Security or Securities, or any portion of the principal amount thereof, shall be deemed to have been paid for all purposes of this Indenture, and the entire indebtedness of the Company in respect thereof shall be deemed to have been satisfied and discharged, if there shall have been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust: 31 37 (a) money in an amount which shall be sufficient, or (b) in the case of a deposit made prior to the Maturity of such Securities or portions thereof, Eligible Obligations, which shall not contain provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide moneys which, together with the money, if any, deposited with or held by the Trustee or such Paying Agent, shall be sufficient, or (c) a combination of (a) or (b) which shall be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Securities or portions thereof on or prior to Maturity; provided, however, that in the case of the provision for payment or redemption of less than all the Securities of any series or Tranche, such Securities or portions thereof shall have been selected by the Security Registrar as provided herein and, in the case of a redemption, the notice requisite to the validity of such redemption shall have been given or irrevocable authority shall have been given by the Company to the Trustee to give such notice, under arrangements satisfactory to the Trustee; and provided, further, that the Company shall have delivered to the Trustee and such Paying Agent: (x) if such deposit shall have been made prior to the Maturity of such Securities, a Company Order stating that the money and Eligible Obligations deposited in accordance with this Section shall be held in trust, as provided in Section 703; (y) if Eligible Obligations shall have been deposited, an Opinion of Counsel that the obligations so deposited constitute Eligible Obligations and do not contain provisions permitting the redemption or other prepayment at the option of the issuer thereof, and an opinion of an independent public accountant of nationally recognized standing, selected by the Company, to the effect that the requirements set forth in clause (b) above have been satisfied; and (z) if such deposit shall have been made prior to the Maturity of such Securities, an Officer's Certificate stating the Company's intention that, upon delivery of such Officer's Certificate, its indebtedness in respect of such Securities or portions thereof will have been satisfied and discharged as contemplated in this Section. Upon the deposit of money or Eligible Obligations, or both, in accordance with this Section, together with the documents required by clauses (x), (y) and (z) above, the Trustee shall, upon receipt of a Company Request, acknowledge in writing that the Security or Securities or portions thereof with respect to which such deposit was made are deemed to have been paid for all purposes of this Indenture and that the entire indebtedness of the Company in respect thereof has been satisfied and discharged as contemplated in this Section. In the event that all of the conditions set forth in the preceding paragraph shall have been satisfied in respect of any Securities or portions thereof except that, for any reason, the Officer's Certificate specified in clause (z) shall not have been delivered, such Securities or portions thereof shall nevertheless be deemed to have been paid for all purposes of this Indenture, and the Holders of such Securities or portions thereof shall nevertheless be no longer entitled to the benefits of this Indenture or of any of the covenants of the Company under Article Six (except the covenants contained in Sections 602, 603 and 604) or any other covenants made in respect of such Securities or portions thereof as contemplated by Section 301, but the indebtedness of the Company in respect of such Securities or portions thereof shall not be deemed to have been satisfied and discharged prior to Maturity for any other purpose, and the Holders of such Securities or portions thereof shall continue to be entitled to look to the Company for payment of the indebtedness represented 32 38 thereby; and, upon Company Request, the Trustee shall acknowledge in writing that such Securities or portions thereof are deemed to have been paid for all purposes of this Indenture. If payment at Stated Maturity of less than all of the Securities of any series, or any Tranche thereof, is to be provided for in the manner and with the effect provided in this Section, the Security Registrar shall select such Securities, or portions of principal amount thereof, in the manner specified by Section 403 for selection for redemption of less than all the Securities of a series or Tranche. In the event that Securities which shall be deemed to have been paid for purposes of this Indenture, and, if such is the case, in respect of which the Company's indebtedness shall have been satisfied and discharged, all as provided in this Section do not mature and are not to be redeemed within the sixty (60) day period commencing with the date of the deposit of moneys or Eligible Obligations, as aforesaid, the Company shall, as promptly as practicable, give a notice, in the same manner as a notice of redemption with respect to such Securities, to the Holders of such Securities to the effect that such deposit has been made and the effect thereof. Notwithstanding that any Securities shall be deemed to have been paid for purposes of this Indenture, as aforesaid, the obligations of the Company and the Trustee in respect of such Securities under Sections 304, 305, 306, 403, 404, 406, 503 (as to notice of redemption), 602, 603, 907, 909, 910 and 915 and this Article Seven shall survive. The Company shall pay, and shall indemnify the Trustee or any Paying Agent with which Eligible Obligations shall have been deposited as provided in this Section against, any tax, fee or other charge imposed on or assessed against such Eligible Obligations or the principal or interest received in respect of such Eligible Obligations, including, but not limited to, any such tax payable by any entity deemed, for tax purposes, to have been created as a result of such deposit. Anything herein to the contrary notwithstanding, (a) if, at any time after a Security would be deemed to have been paid for purposes of this Indenture, and, if such is the case, the Company's indebtedness in respect thereof would be deemed to have been satisfied or discharged, pursuant to this Section (without regard to the provisions of this paragraph), the Trustee or any Paying Agent, as the case may be, shall be required to return the money or Eligible Obligations, or combination thereof, deposited with it as aforesaid to the Company or its representative under any applicable Federal or State bankruptcy, insolvency or other similar law, such Security shall thereupon be deemed retroactively not to have been paid and any satisfaction and discharge of the Company's indebtedness in respect thereof shall retroactively be deemed not to have been effected, and such Security shall be deemed to remain Outstanding and (b) any satisfaction and discharge of the Company's indebtedness in respect of any Security shall be subject to the provisions of the last paragraph of Section 603. SECTION 702. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall upon Company Request cease to be of further effect (except as hereinafter expressly provided), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) no Securities remain Outstanding hereunder; and (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; 33 39 provided, however, that if, in accordance with the last paragraph of Section 701, any Security, previously deemed to have been paid for purposes of this Indenture, shall be deemed retroactively not to have been so paid, this Indenture shall thereupon be deemed retroactively not to have been satisfied and discharged, as aforesaid, and to remain in full force and effect, and the Company shall execute and deliver such instruments as the Trustee shall reasonably request to evidence and acknowledge the same. Notwithstanding the satisfaction and discharge of this Indenture as aforesaid, the obligations of the Company and the Trustee under Sections 304, 305, 306, 403, 404, 406, 503 (as to notice of redemption), 602, 603, 907, 909, 910 and 915 and this Article Seven shall survive. Upon satisfaction and discharge of this Indenture as provided in this Section, the Trustee shall assign, transfer and turn over to the Company, subject to the lien provided by Section 907, any and all money, securities and other property then held by the Trustee for the benefit of the Holders of the Securities other than money and Eligible Obligations held by the Trustee pursuant to Section 703. SECTION 703. APPLICATION OF TRUST MONEY. Neither the Eligible Obligations nor the money deposited pursuant to Section 701, nor the principal or interest payments on any such Eligible Obligations, shall be withdrawn or used for any purpose other than, and such Eligible Obligations and money deposited and the principal and interest payments on any such Eligible Obligations shall be held in trust for, the payment of the principal of and premium, if any, and interest, if any, on the Securities or portions of principal amount thereof in respect of which such deposit was made, all subject, however, to the provisions of Section 603; provided, however, that, so long as there shall not have occurred and be continuing an Event of Default, any cash received from such principal or interest payments on such Eligible Obligations, if not then needed for such purpose, shall, to the extent practicable, be invested in Eligible Obligations of the type described in clause (b) in the first paragraph of Section 701 maturing at such times and in such amounts as shall be sufficient, together with any other moneys and the principal of and interest on any other Eligible Obligations then held by the Trustee, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Securities or portions thereof on and prior to the Maturity thereof, and interest earned from such reinvestment shall be paid over to the Company as received, free and clear of any trust, lien or pledge under this Indenture except the lien provided by Section 907; and provided, further, that, so long as there shall not have occurred and be continuing an Event of Default, any moneys held in accordance with this Section on the Maturity of all such Securities in excess of the amount required to pay the principal of and premium, if any, and interest, if any, then due on such Securities shall be paid over to the Company free and clear of any trust, lien or pledge under this Indenture except the lien provided by Section 907; and provided, further, that if an Event of Default shall have occurred and be continuing, moneys to be paid over to the Company pursuant to this Section shall be held until such Event of Default shall have been waived or cured. 34 40 35 41 ARTICLE EIGHT EVENTS OF DEFAULT; REMEDIES SECTION 801. EVENTS OF DEFAULT. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events: (a) failure to pay interest, if any, on any Security of such series within sixty (60) days after the same becomes due and payable; provided, however, that a valid extension of the interest payment period by the Company as contemplated in Section 312 of this Indenture shall not constitute a failure to pay interest for this purpose; or (b) failure to pay the principal of or premium, if any, on any Security of such series within ten (10) days after its Maturity; or (c) failure to perform, or breach of, any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the performance of which or breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of one or more series of Securities other than such series) for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 33% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Trustee, or the Trustee and the Holders of a principal amount of Securities of such series not less than the principal amount of Securities the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and the Holders of such principal amount of Securities of such series, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued; or (d) the entry by a court having jurisdiction in the premises of (1) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (2) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the Company seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for relief or any such other decree or order shall have remained unstayed and in effect for a period of 90 consecutive days; or (e) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in a case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding 36 42 against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors; or (f) any other Event of Default specified with respect to Securities of such series. SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default shall have occurred and be continuing with respect to Securities of any series at the time Outstanding, then in every such case the Trustee or the Holders of not less than 33% in principal amount of the Outstanding Securities of such series may declare the principal amount (or, if any of the Securities of such series are Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof as contemplated by Section 301) of all of the Securities of such series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon receipt by the Company of notice of such declaration such principal amount (or specified amount) shall become immediately due and payable; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more than one series of Securities, the Trustee or the Holders of not less than 33% in aggregate principal amount of the Outstanding Securities of all such series, considered as one class (and not the Holders of the Securities of any one of such series), may make such declaration of acceleration. At any time after such a declaration of acceleration with respect to Securities of any series shall have been made and before a judgment or decree for payment of the money due shall have been obtained by the Trustee as hereinafter in this Article provided, the Event or Events of Default giving rise to such declaration of acceleration shall, without further act, be deemed to have been waived, and such declaration and its consequences shall, without further act, be deemed to have been rescinded and annulled, if (a) the Company shall have paid or deposited with the Trustee a sum sufficient to pay (1) all overdue interest on all Securities of such series; (2) the principal of and premium, if any, on any Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities; (3) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities; (4) all amounts due to the Trustee under Section 907; and (b) any other Event or Events of Default with respect to Securities of such series, other than the non-payment of the principal of Securities of such series which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 813. 37 43 No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon. SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. If an Event of Default described in clause (a) or (b) of Section 801 shall have occurred and be continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities of the series with respect to which such Event of Default shall have occurred, the whole amount then due and payable on such Securities for principal and premium, if any, and interest, if any, and, to the extent permitted by law, interest on premium, if any, and on any overdue principal and interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 907. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series shall have occurred and be continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal, premium, if any, and interest, if any, owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due to the Trustee under Section 907) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amounts due it under Section 907. 38 44 Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered. SECTION 806. APPLICATION OF MONEY COLLECTED. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or premium, if any, or interest, if any, upon presentation of the Securities in respect of which or for the benefit of which such money shall have been collected and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 907; SECOND: To the payment of the amounts then due and unpaid upon the Securities for principal of and premium, if any, and interest, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, and interest, if any, respectively; and THIRD: To the Company. SECTION 807. LIMITATION ON SUITS. No Holder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (a) such Holder shall have previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of such series; (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; 39 45 (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding; and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and (subject to Section 307 and 312) interest, if any, on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 809. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, and Trustee and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted. SECTION 810. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 811. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 812. CONTROL BY HOLDERS OF SECURITIES. 40 46 If an Event of Default shall have occurred and be continuing in respect of a series of Securities, the Holders of a majority in principal amount of the Outstanding Securities of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more than one series of Securities, the Holders of a majority in aggregate principal amount of the Outstanding Securities of all such series, considered as one class, shall have the right to make such direction, and not the Holders of the Securities of any one of such series; and provided, further, that (a) such direction shall not be in conflict with any rule of law or with this Indenture, and could not involve the Trustee in personal liability in circumstances where indemnity would not, in the Trustee's sole discretion, be adequate, and (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 813. WAIVER OF PAST DEFAULTS. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default (a) in the payment of the principal of or premium, if any, or interest, if any, on any Security of such series, or (b) in respect of a covenant or provision hereof which under Section 1202 cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any and all Events of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 814. UNDERTAKING FOR COSTS. The Company and the Trustee agree, and each Holder by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of all series in respect of which such suit may be brought, considered as one class, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or premium, if any, or interest, if any, on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). SECTION 815. WAIVER OF STAY OR EXTENSION LAWS. 41 47 The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE NINE THE TRUSTEE SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default with respect to Securities of any series, (1) the Trustee undertakes to perform, with respect to Securities of such series, such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may, with respect to Securities of such series, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to Securities of any series shall have occurred and be continuing, the Trustee shall exercise, with respect to Securities of such series, such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this clause (c) shall not be construed to limit the effect of clause (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a 42 48 majority in principal amount of the Outstanding Securities of any one or more series, as provided herein, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 902. NOTICE OF DEFAULTS. The Trustee shall give notice of any default hereunder with respect to the Securities of any series to the Holders of Securities of such series in the manner and to the extent required to do so by the Trust Indenture Act, unless such default shall have been cured or waived; provided, however, that in the case of any default of the character specified in clause (c) of Section 801, no such notice to Holders shall be given until at least 75 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time, or both, would become, an Event of Default. SECTION 903. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 901 and to the applicable provisions of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, or as otherwise expressly provided herein, and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 43 49 (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any Holder pursuant to this Indenture, unless such Holder shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall (subject to applicable legal requirements) be entitled to examine, during normal business hours, the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) except as otherwise provided in Section 801, the Trustee shall not be charged with knowledge of any Event of Default with respect to the Securities of any series for which it is acting as Trustee unless either (1) a Responsible Officer of the Trustee shall have actual knowledge of the Event of Default or (2) written notice of such Event of Default shall have been given to the Trustee by the Company, any other obligor on such Securities or by any Holder of such Securities. SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 905. MAY HOLD SECURITIES. Each of the Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 908 and 913, may otherwise deal with the Company with the same rights it would have if it were not the Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 906. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under no liability for interest on or investment of any money received by it hereunder except as expressly provided herein or otherwise agreed with, and for the sole benefit of, the Company. SECTION 907. COMPENSATION AND REIMBURSEMENT. 44 50 The Company shall (a) pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except to the extent that any such expense, disbursement or advance may be attributable to its negligence, wilful misconduct or bad faith; and (c) indemnify the Trustee and hold it harmless from and against, any loss, liability or expense reasonably incurred by it arising out of or in connection with the acceptance or administration of the trust or trusts hereunder or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, wilful misconduct or bad faith. As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such other than property and funds held in trust under Section 703 (except as otherwise provided in Section 703). "Trustee" for purposes of this Section shall include any predecessor Trustee; provided, however, that the negligence, wilful misconduct or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder. SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee shall have or acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting interest or resign to the extent, in the manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and this Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to the extent permitted thereby, the Trustee, in its capacity as trustee in respect of the Securities of any series, shall not be deemed to have a conflicting interest arising from its capacity as trustee in respect of the Securities of any other series. SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be (a) a corporation organized and doing business under the laws of the United States, any State or Territory thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal or State authority, or (b) if and to the extent permitted by the Commission by rule, regulation or order upon application, a corporation or other Person organized and doing business under the laws of a foreign government, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 or the Dollar equivalent of the applicable foreign currency and subject to supervision or examination by authority of such 45 51 foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, and, in either case, qualified and eligible under this Article and the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 911. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 911 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 908 after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months, or (2) the Trustee shall cease to be eligible under Section 909 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities or (B) subject to Section 814, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause (other than as contemplated in clause (B) in clause (d) of this Section), with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with 46 52 respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 911. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 911, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 911, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) So long as no event which is, or after notice or lapse of time, or both, would become, an Event of Default shall have occurred and be continuing, and except with respect to a Trustee appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities pursuant to subsection (e) of this Section, if the Company shall have delivered to the Trustee (1) a Board Resolution appointing a successor Trustee, effective as of a date specified therein, and (2) an instrument of acceptance of such appointment, effective as of such date, by such successor Trustee in accordance with Section 911, the Trustee shall be deemed to have resigned as contemplated in subsection (b) of this Section, the successor Trustee shall be deemed to have been appointed by the Company pursuant to subsection (e) of this Section and such appointment shall be deemed to have been accepted as contemplated in Section 911, all as of such date, and all other provisions of this Section and Section 911 shall be applicable to such resignation, appointment and acceptance except to the extent inconsistent with this clause (f). (g) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its corporate trust office. SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the appointment hereunder of a successor Trustee with respect to the Securities of all series, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all sums owed to it, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. 47 53 (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of such series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee, upon payment of all sums owed to it, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any instruments which fully vest in and confirm to such successor Trustee all such rights, powers and trusts referred to in clause (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If the Trustee shall be or become a creditor of the Company or any other obligor upon the Securities (other than by reason of a relationship described in Section 311(b) of the Trust Indenture Act), the Trustee shall be subject to any and all applicable provisions of the Trust Indenture Act 48 54 regarding the collection of claims against the Company or such other obligor. For purposes of Section 311(b) of the Trust Indenture Act: (a) the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (b) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company or such obligor for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company or such obligor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of any applicable jurisdiction, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least thirty-three per centum (33%) in principal amount of the Securities then Outstanding, the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, or to act as separate trustee, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment. Should any written instrument or instruments from the Company be required by any co-trustee or separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions: (a) the Securities shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform 49 55 such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, if an Event of Default shall have occurred and be continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Company. Upon the written request of the Trustee, the Company shall join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section; (d) no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; and (e) any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities of one or more series, or any Tranche thereof, which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series or Tranche issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States, any State or Territory thereof or the District of Columbia or the Commonwealth of Puerto Rico, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. 50 56 An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, in accordance with, and subject to the provisions of Section 907. The provisions of Sections 308, 904 and 905 shall be applicable to each Authenticating Agent. If an appointment with respect to the Securities of one or more series, or any Tranche thereof, shall be made pursuant to this Section, the Securities of such series or Tranche may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication substantially in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: The First National Bank of Chicago, As Trustee By:_________________________________ As Authenticating Agent By:_________________________________ Authorized Signatory If all of the Securities of a series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which writing need not comply with Section 102 and need not be accompanied by an Opinion of Counsel), shall appoint, in accordance with this Section and in accordance with such procedures as shall be acceptable to the Trustee, an Authenticating Agent having an office in a Place of Payment designated by the Company with respect to such series of Securities. 51 57 ARTICLE TEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 1001. LISTS OF HOLDERS. Semiannually, not later than January 1 and July 1 in each year, commencing January 1, 1998, and at such other times as the Trustee may request in writing, the Company shall furnish or cause to be furnished to the Trustee information as to the names and addresses of the Holders, and the Trustee shall preserve such information and similar information received by it in any other capacity and afford to the Holders access to information so preserved by it, all to such extent, if any, and in such manner as shall be required by the Trust Indenture Act; provided, however, that no such list need be furnished so long as the Trustee shall be the Security Registrar. SECTION 1002. REPORTS BY TRUSTEE AND COMPANY. Not later than July 1 in each year, commencing July 1, 1998, the Trustee shall transmit to the Holders, the Commission and each securities exchange upon which any Securities are listed, a report, dated as of the next preceding May 15, with respect to any events and other matters described in Section 313(a) of the Trust Indenture Act, in such manner and to the extent required by the Trust Indenture Act. The Trustee shall transmit to the Holders, the Commission and each securities exchange upon which any Securities are listed,, and the Company shall file with the Trustee (within thirty (30) days after filing with the Commission in the case of reports which pursuant to the Trust Indenture Act must be filed with the Commission and furnished to the Trustee) and transmit to the Holders, such other information, reports and other documents, if any, at such times and in such manner, as shall be required by the Trust Indenture Act. ARTICLE ELEVEN CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER SECTION 1101. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge into any other corporation, or convey or otherwise transfer or lease its properties and assets substantially as an entirety to any Person, unless (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and existing under the laws of the United States, any State thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest, if any, on all Outstanding Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction and treating any indebtedness for borrowed money which becomes an obligation of the Company as a result of such transaction as having been incurred by the Company at the time of such transaction, no Event 52 58 of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, or other transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transactions have been complied with. SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation by the Company with or merger by the Company into any other corporation or any conveyance, or other transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 1101, the successor corporation formed by such consolidation or into which the Company is merged or the Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities Outstanding hereunder. ARTICLE TWELVE SUPPLEMENTAL INDENTURES SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities, all as provided in Article Eleven; or (b) to add one or more covenants of the Company or other provisions for the benefit of all Holders or for the benefit of the Holders of, or to remain in effect only so long as there shall be Outstanding, Securities of one or more specified series, or one or more specified Tranches thereof, or to surrender any right or power herein conferred upon the Company; or (c) to add any additional Events of Default with respect to all or any series of Securities Outstanding hereunder; or (d) to change or eliminate any provision of this Indenture or to add any new provision to this Indenture; provided, however, that if such change, elimination or addition shall adversely affect the interests of the Holders of Securities of any series or Tranche Outstanding on the date of such indenture supplemental hereto in any material respect, such change, elimination or addition shall become effective (1) with respect to such series or Tranche only pursuant to the provisions of Section 1202 hereof or (2) when no Security of such series or Tranche remains Outstanding; or 53 59 (e) to provide collateral security for all but not part of the Securities; or (f) to establish the form or terms of Securities of any series or Tranche as contemplated by Sections 201 and 301; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of, the holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment hereunder by a separate or successor Trustee or co-Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of clause (b) of Section 911; or (i) to provide for the procedures required to permit the Company to utilize, at its option, a non-certificated system of registration for all, or any series or Tranche of, the Securities; or (j) to change any place or places where (1) the principal of and premium, if any, and interest, if any, on all or any series of Securities, or any Tranche thereof, shall be payable, (2) all or any series of Securities, or any Tranche thereof, may be surrendered for registration of transfer, (3) all or any series of Securities, or any Tranche thereof, may be surrendered for exchange and (4) notices and demands to or upon the Company in respect of all or any series of Securities, or any Tranche thereof, and this Indenture may be served; or (k) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other changes to the provisions hereof or to add other provisions with respect to matters or questions arising under this Indenture, provided that such other changes or additions shall not adversely affect the interests of the Holders of Securities of any series or Tranche in any material respect. Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the execution and delivery of this Indenture or at any time thereafter shall be amended and (x) if any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to effect or evidence such changes or additional provisions; or (y) if any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof which, at the date of the execution and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein, this Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to evidence such amendment hereof. 54 60 SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under this Indenture, considered as one class, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture; provided, however, that if there shall be Securities of more than one series Outstanding hereunder and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that if the Securities of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that no such supplemental indenture shall: (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on (except as provided in Section 312 hereof), any Security, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of a Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 802, or change the coin or currency (or other property), in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity of any Security (or, in the case of redemption, on or after the Redemption Date), without, in any such case, the consent of the Holder of such Security, or (b) reduce the percentage in principal amount of the Outstanding Securities of any series or any Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of this Indenture or of any default hereunder and its consequences, or reduce the requirements of Section 1304 for quorum or voting, without, in any such case, the consent of the Holders of each Outstanding Security of such series or Tranche, or (c) modify any of the provisions of this Section, Section 607 or Section 813 with respect to the Securities of any series, or any Tranche thereof, or except to increase the percentages in principal amount referred to in this Section or such other Sections or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of clause (b) of Section 911 and clause (h) of Section 1201. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or of one or more Tranches thereof, or which modifies the rights of the Holders of Securities of such series or Tranches with respect to such covenant or other provision, shall be 55 61 deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or Tranche. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. A waiver by a Holder of such Holder's right to consent under this Section shall be deemed to be a consent of such Holder. SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 901) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise. SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Any supplemental indenture permitted by this Article may restate this Indenture in its entirety, and, upon the execution and delivery thereof, any such restatement shall supersede this Indenture as theretofore in effect for all purposes. SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities of any series, or any Tranche thereof, authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series, or any Tranche thereof, so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series or Tranche. SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE. If the terms of any particular series of Securities shall have been established in a Board Resolution or an Officer's Certificate pursuant to a Board Resolution as contemplated by Section 301, and not in an indenture supplemental hereto, additions to, changes in or the elimination of any of such terms may be effected by means of a supplemental Board Resolution or Officer's Certificate, as the case may be, delivered to, and accepted by, the Trustee; provided, however, that such supplemental Board Resolution or Officer's Certificate shall not be accepted by the Trustee or otherwise be effective unless all conditions set forth in this Indenture which would be required to be satisfied if such additions, changes or elimination were contained in a supplemental indenture shall have been 56 62 appropriately satisfied. Upon the acceptance thereof by the Trustee, any such supplemental Board Resolution or Officer's Certificate shall be deemed to be a "supplemental indenture" for purposes of Section 1204 and 1206. ARTICLE THIRTEEN MEETINGS OF HOLDERS; ACTION WITHOUT MEETING SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders of Securities of one or more, or all, series, or any Tranche or Tranches thereof, may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series or Tranches. SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS. (a) The Trustee may at any time call a meeting of Holders of Securities of one or more, or all, series, or any Tranche or Tranches thereof, for any purpose specified in Section 1301, to be held at such time and at such place in the Borough of Manhattan, The City of New York, as the Trustee shall determine, or, with the approval of the Company, at any other place. Notice of every such meeting, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) If the Trustee shall have been requested to call a meeting of the Holders of Securities of one or more, or all, series, or any Tranche or Tranches thereof, by the Company or by the Holders of 33% in aggregate principal amount of all of such series and Tranches, considered as one class, for any purpose specified in Section 1301, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have given the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series and Tranches in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or in such other place as shall be determined or approved by the Company, for such meeting and may call such meeting for such purposes by giving notice thereof as provided in clause (a) of this Section. (c) Any meeting of Holders of Securities of one or more, or all, series, or any Tranche or Tranches thereof, shall be valid without notice if the Holders of all Outstanding Securities of such series or Tranches are present in person or by proxy and if representatives of the Company and the Trustee are present, or if notice is waived in writing before or after the meeting by the Holders of all Outstanding Securities of such series, or any Tranche or Tranches thereof, or by such of them as are not present at the meeting in person or by proxy, and by the Company and the Trustee. SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS. 57 63 To be entitled to vote at any meeting of Holders of Securities of one or more, or all, series, or any Tranche or Tranches thereof, a Person shall be (a) a Holder of one or more Outstanding Securities of such series or Tranches, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series or Tranches by such Holder or Holders. The only Persons who shall be entitled to attend any meeting of Holders of Securities of any series or Tranche shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1304. QUORUM; ACTION. The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of the series and Tranches with respect to which a meeting shall have been called as hereinbefore provided, considered as one class, shall constitute a quorum for a meeting of Holders of Securities of such series and Tranches; provided, however, that if any action is to be taken at such meeting which this Indenture expressly provides may be taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of such series and Tranches, considered as one class, the Persons entitled to vote such specified percentage in principal amount of the Outstanding Securities of such series and Tranches, considered as one class, shall constitute a quorum. In the absence of a quorum within one hour of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series and Tranches, be dissolved. In any other case the meeting may be adjourned for such period as may be determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for such period as may be determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Except as provided by clause (e) of Section 1305, notice of the reconvening of any meeting adjourned for more than 30 days shall be given as provided in clause (a) of Section 1302 not less than ten days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series and Tranches which shall constitute a quorum. Except as limited by Section 1202, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in aggregate principal amount of the Outstanding Securities of the series and Tranches with respect to which such meeting shall have been called, considered as one class; provided, however, that, except as so limited, any resolution with respect to any action which this Indenture expressly provides may be taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of such series and Tranches, considered as one class, may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series and Tranches, considered as one class. Any resolution passed or decision taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities of the series and Tranches with respect to which such meeting shall have been held, whether or not present or represented at the meeting. 58 64 SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS. (a) Attendance at meetings of Holders of Securities may be in person or by proxy; and, to the extent permitted by law, any such proxy shall remain in effect and be binding upon any future Holder of the Securities with respect to which it was given unless and until specifically revoked by the Holder or future Holder of such Securities before being voted. (b) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of such Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (c) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in clause (b) of Section 1302, in which case the Company or the Holders of Securities of the series and Tranches calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series and Tranches represented at the meeting, considered as one class. (d) At any meeting each Holder or proxy shall be entitled to one vote for each $1 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (e) Any meeting duly called pursuant to Section 1302 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series and Tranches represented at the meeting, considered as one class; and the meeting may be held as so adjourned without further notice. SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities, of the series and Tranches with respect to which the meeting shall have been called, held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports of all votes cast at the meeting. A record of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits 59 65 by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1302 and, if applicable, Section 1304. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 1307. ACTION WITHOUT MEETING. In lieu of a vote of Holders at a meeting as hereinbefore contemplated in this Article, any request, demand, authorization, direction, notice, consent, waiver or other action may be made, given or taken by Holders by written instruments as provided in Section 104. ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 1401. LIABILITY SOLELY CORPORATE. No recourse shall be had for the payment of the principal of or premium, if any, or interest, if any, on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under this Indenture, against any incorporator, stockholder, officer or director, as such, past, present or future of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Securities are solely corporate obligations, and that no personal liability whatsoever shall attach to, or be incurred by, any incorporator, stockholder, officer or director, past, present or future, of the Company or of any predecessor or successor corporation, either directly or indirectly through the Company or any predecessor or successor corporation, because of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or to be implied herefrom or therefrom, and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities. ------------------------- This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. IES UTILITIES INC. 60 66 By: ________________________________ ATTEST: ___________________________________ THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE By: ________________________________ ATTEST: ___________________________________ 61 67 STATE OF IOWA ) ) ss.: COUNTY OF LINN ) On the ____ day of _________, 1997, before me personally came _______________, to me known, who, being by me duly sworn, did depose and say that he is the _______________ of IES Utilities Inc., the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority, acknowledging the instrument to be the free act and deed of said corporation. ________________________________ Notary Public [Notarial Seal] STATE OF ILLINOIS ) ) ss.: COUNTY OF ______ ) On the ____ day of _________, 1997, before me personally came _______________, to me known, who, being by me duly sworn, did depose and say that he is a _______________ of The First National Bank of Chicago, the national banking association described in and which executed the foregoing instrument; that he knows the seal of said national banking association; that the seal affixed to said instrument is the seal of said national banking association; that it was so affixed by authority of the Board of Directors of said national banking association, and that he signed his name thereto by like authority, acknowledging the instrument to be the free act and deed of said national banking association. ________________________________ Notary Public [Notarial Seal] -i- EX-5 8 OPNION RE: LEGALITY 1 will be under no obligation to exercise any of its rights or powers under the Senior Unsecured Indenture at the request or direction of any Holder, unless such Holder shall have offered to the Senior Unsecured Indenture Trustee reasonable security or indemnity. (Section 903) Subject to such provisions of the indemnification of the Senior Unsecured Indenture Trustee, the Holders of a majority in principal amount of the Outstanding Senior Debentures of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Senior Unsecured Indenture Trustee, or exercising any trust or power conferred on the Senior Unsecured Indenture Trustee, with respect to the Senior Debentures of that series. (Section 812) No Holder of a Senior Debenture of any series will have any right to institute any proceeding with respect to the Senior Unsecured Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Senior Debentures of such series, (ii) the Holders of not less than a majority in aggregate principal amount of the Outstanding Senior Debentures of such series have made written request to the Senior Unsecured Indenture Trustee, and such Holder or Holders have offered reasonable indemnity to the Senior Unsecured Indenture Trustee, to institute such proceeding as trustee and (iii) the Senior Unsecured Indenture Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Outstanding Senior Debentures of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 807) However, such limitations do not apply to a suit instituted by a Holder of a Senior Debenture for the enforcement of payment of the principal of or any premium or interest on such Senior Debenture on or after the applicable due date specified in such Senior Debenture. (Section 808) The Company will be required to furnish to the Senior Unsecured Indenture Trustee annually, not later than October 1 in each year, a statement by an appropriate officer as to such officer's knowledge of the Company's compliance with all conditions and covenants under the Senior Unsecured Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under the Senior Unsecured Indenture. (Section 606) RIGHT TO CURE At any time after the declaration of acceleration with respect to the Senior Debentures of any series has been made and before a judgment or decree for payment of the money due has been obtained, the Event or Events of Default giving rise to such declaration of acceleration will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if (a) the Company has paid or deposited with the Senior Unsecured Indenture Trustee a sum sufficient to pay (1) all overdue interest on all Senior Debentures of such series; (2) the principal of and premium, if any, on any Senior Debentures of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Senior Debentures; (3) interest upon overdue interest at the rate or rates prescribed therefor in such Senior Debentures, to the extent that payment of such interest is lawful; and (4) all amounts due to the Senior Unsecured Indenture Trustee under the Senior Unsecured Indenture; and (b) any other Event or Events of Default with respect to the Senior Debentures of such series, other than the non-payment of the principal of the Senior Debentures of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the Senior Unsecured Indenture. (Section 802) MODIFICATION AND WAIVER Without the consent of any Holder of Senior Debentures, the Company and the Senior Unsecured Indenture Trustee may enter into one or more supplemental indentures to the Senior Unsecured Indenture for any of the 32 2 following purposes: (a) to evidence the assumption by any permitted successor to the Company of the covenants of the Company in the Senior Unsecured Indenture and the Senior Debentures; or (b) to add one or more covenants of the Company or other provisions for the benefit of the Holders of all or any series of Outstanding Senior Debentures or to surrender any right or power conferred upon the Company by the Senior Unsecured Indenture; or (c) to add any additional Events of Default with respect to all or any series of Outstanding Senior Debentures; or (d) to change or eliminate any provision of the Senior Unsecured Indenture or to add any new provision to the Senior Unsecured Indenture, provided that if such change, elimination or addition will adversely affect the interests of the Holders of Senior Debentures of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when the consent of the Holders of such series so affected has been obtained or when there is no Senior Debenture of such series remaining Outstanding under the Senior Unsecured Indenture; or (e) to provide collateral security for the Senior Debentures; or (f) to establish the form or terms of Senior Debentures of any series as permitted by the Senior Unsecured Indenture; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for giving of notice to, and the solicitation of the vote or consent of, the Holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment of a separate or successor Senior Unsecured Indenture Trustee under the Senior Unsecured Indenture with respect to the Senior Debentures of one or more series and to add or to change any of the provisions of the Senior Unsecured Indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the Senior Unsecured Indenture by more than one trustee; or (i) to provide for the procedures required to permit the utilization of a noncertificated system of registration for any series of Senior Debentures; or (j) to change any place where (1) the principal of and premium, if any, and interest, if any, on any Senior Debentures shall be payable, (2) any Senior Debentures may be surrendered for registration of transfer or exchange and (3) notices and demands to or upon the Company in respect of Senior Debentures and the Senior Unsecured Indenture may be served; or (k) to cure any ambiguity, to correct or supplement any defective or inconsistent provision or to make or change any other provisions with respect to matters and questions arising under the Senior Unsecured Indenture, provided such changes or additions shall not adversely affect the interests of the Holders of Senior Debentures of any series in any material respect. (Section 1201) The Holders of not less than a majority in aggregate principal amount of the Outstanding Senior Debentures of any series may waive compliance by the Company with certain restrictive provisions of the Senior Unsecured Indenture. (Section 607) The Holders of not less than a majority in principal amount of the Outstanding Senior Debentures of any series may waive any past default under the Senior Unsecured Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Senior Unsecured Indenture that cannot be modified or be amended without the consent of the Holder of each Outstanding Senior Debenture of such series affected. (Section 813) Without limiting the generality of the foregoing, if the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date of the Senior Unsecured Indenture in such a way as to require changes to the Senior Unsecured Indenture or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the Senior Unsecured Indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the Senior Unsecured Indenture, the Senior Unsecured Indenture will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimination, and the Company and the Senior Unsecured Indenture Trustee may, without the consent of any Holders, enter into one or more supplemental indentures to evidence or effect such amendment. (Section 1201) Except as provided above, the consent of the Holders of not less than a majority in aggregate principal amount of the Senior Debentures of all series then Outstanding, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the Senior Unsecured Indenture pursuant to one or more supplemental indentures; provided, however, that if less than all of the series of Senior Debentures Outstanding are directly affected by a proposed supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of Outstanding Senior Debentures of all series so directly affected, considered as one class, will be required; and provided, further, that if the Senior Debentures of any series have been issued in more than one Tranche and if the proposed supplemental indenture directly affects the rights of the Holders of one or more, but less than all, such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Senior Debentures of all Tranches so directly affected, considered as one class, will be required; and provided further, that no such supplemental indenture may (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Senior Debenture, or 33 EX-23.A 9 CONSENT OF ARTHUR ANDERSON LLP 1 EXHIBIT 23(a) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated January 31, 1997, in IES Utilities Inc.'s Form 10-K for the year ended December 31, 1996, and to all references to our firm included in this registration statement. ARTHUR ANDERSEN LLP Chicago, Illinois, July 25, 1997 EX-25.A 10 FORM T-1 1 EXHIBIT 25(a) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) IES UTILITIES, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA 42-0331370 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) IES TOWER 200 FIRST STREET S.E. P.O. BOX 351 CEDAR RAPIDS, IOWA 52406 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) COLLATERAL TRUST BONDS (TITLE OF INDENTURE SECURITIES) 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 3 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and the State of Illinois, on this 25th day of July, 1997. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE By /s/ John R. Prendiville John R. Prendiville Vice President * EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 4 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT July 25, 1997 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between IES Utilities, Inc. and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO By /s/ John R. Prendiville John R. Prendiville Vice President 5 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------------ THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) 0081 3,871,170 1.a. b. Interest-bearing balances(2) 0071 6,498,314 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ... 1773 3,901,208 2.b. 3. Federal funds sold and securities purchased under agreements to resell 1350 4,612,975 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 23,345,201 4.a. b. LESS: Allowance for loan and lease losses RCFD 3123 420,963 4.b. c. LESS: Allocated transfer risk reserve RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 22,924,238 4.d. 5. Trading assets (from Schedule RD-D) 3545 8,792,158 5. 6. Premises and fixed assets (including capitalized leases) 2145 706,928 6. 7. Other real estate owned (from Schedule RC-M) 2150 6,563 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 61,551 8. 9. Customers' liability to this bank on acceptances outstanding 2155 488,866 9. 10. Intangible assets (from Schedule RC-M) 2143 291,569 10. 11. Other assets (from Schedule RC-F) 2160 1,775,283 11. 12. Total assets (sum of items 1 through 11) 2170 53,930,823 12.
(1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 6 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN Thousands BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) RCON 2200 21,550,056 13.a. (1) Noninterest-bearing(1) RCON 6631 8,895,137 13.a.1 (2) Interest-bearing RCON 6636 12,654,919 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) RCFN 2200 12,364,650 13.b. (1) Noninterest bearing RCFN 6631 287,496 13.b.1 (2) Interest-bearing RCFN 6636 12,077,154 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 3,817,421 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,621 15.a. b. Trading Liabilities (from Schedule RC-D) ..................... RCFD 3548 5,872,831 15b. 16. Other borrowed money: a. With original maturity of one year or less RCFD 2332 2,607,549 16.a. b. With original maturity of more than one year RCFD 2333 322,414 16b. 17. Not applicable 18. Bank's liability on acceptance executed and outstanding RCFD 2920 488,866 18. 19. Subordinated notes and debentures RCFD 3200 1,550,000 19. 20. Other liabilities (from Schedule RC-G) RCFD 2930 1,196,229 20. 21. Total liabilities (sum of items 13 through 20) RCFD 2948 49,833,637 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus RCFD 3838 0 23. 24. Common stock RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,944,244 25. 26. a. Undivided profits and capital reserves RCFD 3632 954,885 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities RCFD 8434 (1,089) 26.b. 27. Cumulative foreign currency translation adjustments RCFD 3284 (1,712) 27. 28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,097,186 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) RCFD 3300 53,930,823 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 .............................................. RCFD 6724 2 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work (1) Includes total demand deposits and noninterest-bearing time and savings deposits. EX-25.B 11 FORM T-1 1 EXHIBIT 25(b) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) IES UTILITIES, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA 42-0331370 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) IES TOWER 200 FIRST STREET S.E. P.O. BOX 351 CEDAR RAPIDS, IOWA 52406 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) SUBORDINATED DEBENTURES (TITLE OF INDENTURE SECURITIES) 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 3 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and the State of Illinois, on this 25th day of July, 1997. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE By /s/ John R. Prendiville John R. Prendiville Vice President * EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 4 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT July 25, 1997 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between IES Utilities, Inc. and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO By /s/ John R. Prendiville John R. Prendiville Vice President 5 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------------ THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) 0081 3,871,170 1.a. b. Interest-bearing balances(2) 0071 6,498,314 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ... 1773 3,901,208 2.b. 3. Federal funds sold and securities purchased under agreements to resell 1350 4,612,975 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 23,345,201 4.a. b. LESS: Allowance for loan and lease losses RCFD 3123 420,963 4.b. c. LESS: Allocated transfer risk reserve RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 22,924,238 4.d. 5. Trading assets (from Schedule RD-D) 3545 8,792,158 5. 6. Premises and fixed assets (including capitalized leases) 2145 706,928 6. 7. Other real estate owned (from Schedule RC-M) 2150 6,563 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 61,551 8. 9. Customers' liability to this bank on acceptances outstanding 2155 488,866 9. 10. Intangible assets (from Schedule RC-M) 2143 291,569 10. 11. Other assets (from Schedule RC-F) 2160 1,775,283 11. 12. Total assets (sum of items 1 through 11) 2170 53,930,823 12.
(1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 6 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN Thousands BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) RCON 2200 21,550,056 13.a. (1) Noninterest-bearing(1) RCON 6631 8,895,137 13.a.1 (2) Interest-bearing RCON 6636 12,654,919 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) RCFN 2200 12,364,650 13.b. (1) Noninterest bearing RCFN 6631 287,496 13.b.1 (2) Interest-bearing RCFN 6636 12,077,154 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 3,817,421 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,621 15.a. b. Trading Liabilities (from Schedule RC-D) ..................... RCFD 3548 5,872,831 15b. 16. Other borrowed money: a. With original maturity of one year or less RCFD 2332 2,607,549 16.a. b. With original maturity of more than one year RCFD 2333 322,414 16b. 17. Not applicable 18. Bank's liability on acceptance executed and outstanding RCFD 2920 488,866 18. 19. Subordinated notes and debentures RCFD 3200 1,550,000 19. 20. Other liabilities (from Schedule RC-G) RCFD 2930 1,196,229 20. 21. Total liabilities (sum of items 13 through 20) RCFD 2948 49,833,637 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus RCFD 3838 0 23. 24. Common stock RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,944,244 25. 26. a. Undivided profits and capital reserves RCFD 3632 954,885 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities RCFD 8434 (1,089) 26.b. 27. Cumulative foreign currency translation adjustments RCFD 3284 (1,712) 27. 28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,097,186 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) RCFD 3300 53,930,823 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 .............................................. RCFD 6724 2 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work (1) Includes total demand deposits and noninterest-bearing time and savings deposits. EX-25.C 12 FORM T-1 1 EXHIBIT 25(c) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) IES UTILITIES, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA 42-0331370 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) IES TOWER 200 FIRST STREET S.E. P.O. BOX 351 CEDAR RAPIDS, IOWA 52406 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) DEBT SECURITIES (TITLE OF INDENTURE SECURITIES) 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 3 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and the State of Illinois, on this 14th day of July, 1997. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE By /s/ John R. Prendiville John R. Prendiville Vice President * EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 4 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT July 14, 1997 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between IES Utilities, Inc. and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO By /s/ John R. Prendiville John R. Prendiville Vice President 5 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------------ THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) 0081 3,871,170 1.a. b. Interest-bearing balances(2) 0071 6,498,314 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ... 1773 3,901,208 2.b. 3. Federal funds sold and securities purchased under agreements to resell 1350 4,612,975 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 23,345,201 4.a. b. LESS: Allowance for loan and lease losses RCFD 3123 420,963 4.b. c. LESS: Allocated transfer risk reserve RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 22,924,238 4.d. 5. Trading assets (from Schedule RD-D) 3545 8,792,158 5. 6. Premises and fixed assets (including capitalized leases) 2145 706,928 6. 7. Other real estate owned (from Schedule RC-M) 2150 6,563 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 61,551 8. 9. Customers' liability to this bank on acceptances outstanding 2155 488,866 9. 10. Intangible assets (from Schedule RC-M) 2143 291,569 10. 11. Other assets (from Schedule RC-F) 2160 1,775,283 11. 12. Total assets (sum of items 1 through 11) 2170 53,930,823 12.
(1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 6 Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN Thousands BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) RCON 2200 21,550,056 13.a. (1) Noninterest-bearing(1) RCON 6631 8,895,137 13.a.1 (2) Interest-bearing RCON 6636 12,654,919 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) RCFN 2200 12,364,650 13.b. (1) Noninterest bearing RCFN 6631 287,496 13.b.1 (2) Interest-bearing RCFN 6636 12,077,154 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 3,817,421 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,621 15.a. b. Trading Liabilities (from Schedule RC-D) ..................... RCFD 3548 5,872,831 15b. 16. Other borrowed money: a. With original maturity of one year or less RCFD 2332 2,607,549 16.a. b. With original maturity of more than one year RCFD 2333 322,414 16b. 17. Not applicable 18. Bank's liability on acceptance executed and outstanding RCFD 2920 488,866 18. 19. Subordinated notes and debentures RCFD 3200 1,550,000 19. 20. Other liabilities (from Schedule RC-G) RCFD 2930 1,196,229 20. 21. Total liabilities (sum of items 13 through 20) RCFD 2948 49,833,637 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus RCFD 3838 0 23. 24. Common stock RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,944,244 25. 26. a. Undivided profits and capital reserves RCFD 3632 954,885 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities RCFD 8434 (1,089) 26.b. 27. Cumulative foreign currency translation adjustments RCFD 3284 (1,712) 27. 28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,097,186 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) RCFD 3300 53,930,823 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 .............................................. RCFD 6724 2 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work (1) Includes total demand deposits and noninterest-bearing time and savings deposits. EX-26 13 FORM OF LETTER TO PERSPECTIVE PURCHASERS 1 EXHIBIT 26 [Letterhead of IES] [Date] To: Re: IES Utilities Inc. Proposed Collateral Trust Bond Issue Ladies/Gentlemen: IES Utilities Inc. plans to commence an offering of $__________ in aggregate principal amount of its _______________ (the "_____") during the week of __________. Two registration statements on Form S-3 (File Nos. 33-62259 and 333-_____) (collectively, the "Registration Statement") relating to the ________ were filed with the SEC. It is expected bids will be solicited on either _________ or _________. The purpose of this letter is to extend to you an invitation to bid on this issue and to define the bidding process. Proposals are being solicited from _____ investment banking firms: _____________________________. The Company will initiate the bidding process by contacting each of you by phone at approximately ______ New York City time the day prior to the bid. Your completed bid sheet should be returned to me by facsimile at ______ New York City time the following day. (Appropriate FAX numbers will be provided on the bid sheet.) IES Utilities Inc. will select an underwriter based on the economics of the proposals as well as any other criteria it deems appropriate. This selection will be made within 15 minutes of receipt of the bids with pricing and execution of the underwriting agreement expected to be completed the same day. Closing will occur ______ business days after pricing. All bids are expected to be made in good faith with final pricing consistent with the selected offer. You should assume IES Utilities will be paid in same day funds at closing and that Dorsey & Whitney's fees will be paid by underwriters. The Company does not plan to include a rating out in the underwriting agreement. Should your proposal be contingent on a rating out, please indicate so in your bid. Under Section 34.2 of the Rules of the Federal Energy Regulatory Commission, we are required to notify you that no bid for securities shall be invited or accepted from any person who: i) prior to the submission of bids has performed any service for any fee or compensation in connection with the proposed issuance of securities; ii) violates Section 305(a) of the Federal Power Act with respect to this bid. I am enclosing some materials which should be helpful in your due diligence. Included are the IES Utilities latest Form 10-K , appropriate Form 10-Q's, appropriate Form 8-K's, the Proxy Statement filed with the SEC on _______, the Registration Statement, and the form of underwriting agreement. Also enclosed is a Prospective Purchasers Questionnaire. Please complete this form and return it to me. A due diligence conference call is currently scheduled for ______ New York City time on ____________. ____________ of Dorsey & Whitney will be in contact with you to verify this. 2 Attached is a summary of the proposed offering as well as a distribution list and the proposed bid form. If you have any questions, please feel free to call either _____________ or ____________. Very truly yours, -----END PRIVACY-ENHANCED MESSAGE-----