<PAGE>
As filed with the Securities and Exchange Commission on March 12, 1999
Registration No. 333-73137
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Pre-Effective Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
WISCONSIN ENERGY CORPORATION WEC CAPITAL TRUST I
(Exact name of Registrant as specified WEC CAPITAL TRUST II
in its charter) (Exact name of each Registrant as
specified in its Trust Agreement)
WISCONSIN DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
39-1391525 (Applied For)
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
231 West Michigan Street c/o Wisconsin Energy Corporation
P. O. Box 2949 231 West Michigan Street
Milwaukee, Wisconsin 53201 P. O. Box 2949
(414) 221-2345 Milwaukee, Wisconsin 53201
(Address, including zip code, and (414) 221-2345
telephone number, including area code, (Address, including zip code, and
of Registrant's principal executive telephone number, including area code,
offices) of Registrants' principal executive
offices)
CALVIN H. BAKER
Treasurer and Chief Financial Officer
Wisconsin Energy Corporation
231 West Michigan Street
P. O. Box 2949
Milwaukee, Wisconsin 53201
(414) 221-2345
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
BRUCE C. DAVIDSON GARY W. WOLF
Quarles & Brady LLP Cahill Gordon & Reindel
411 East Wisconsin Avenue 80 Pine Street
Milwaukee, Wisconsin 53202 New York, New York 10005
(414) 277-5000 (212) 701-3600
Approximate date of commencement of proposed sale of the securities to the
public: At such time or from time to time after the effective date of this
Registration Statement as the Registrants shall determine in light of market
conditions and other factors.
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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
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. [_]
----------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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 or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
EXPLANATORY NOTE
This Registration Statement includes a prospectus to be used in connection
with offerings of (a) preferred securities issued by WEC Capital Trusts I and
II, severally, (b) debt securities issued by Wisconsin Energy Corporation,
including junior subordinated debentures issued to WEC Capital Trusts I and II,
and (c) guarantees by Wisconsin Energy Corporation of the preferred securities
issued severally by WEC Capital Trusts I and II. Each offering of securities
made under this Registration Statement will be made pursuant to this
prospectus, with the specifications of the securities offered thereby set forth
in an accompanying prospectus supplement. The prospectus may not be used to
consummate sales of securities unless accompanied by a prospectus supplement.
The prospectus supplement for the offering of preferred securities to be
issued by WEC Capital Trust I follows immediately after this Explanatory Note
which is then followed immediately by the related prospectus for the offering
of (a) the preferred securities issued by WEC Capital Trusts I and II,
severally, (b) the debt securities issued by Wisconsin Energy Corporation and
(c) the guarantees of the preferred securities issued severally by WEC Capital
Trusts I and II, and certain back-up obligations of Wisconsin Energy
Corporation.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus supplement is not complete and +
+may be changed. We may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This preliminary prospectus supplement is not an offer to sell these +
+securities and it is not soliciting an offer to buy these securities in any +
+state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 12, 1999
PROSPECTUS SUPPLEMENT
(To Prospectus Dated , 1999)
6,000,000 Preferred Securities
WEC CAPITAL TRUST I
% Trust Preferred Securities (TruPS(R))
($25 liquidation amount per Preferred Security)
Fully and unconditionally guaranteed, as described herein, by
WISCONSIN ENERGY CORPORATION
A brief description of the % Trust Preferred Securities (TruPS(R)) can be
found under "SUMMARY INFORMATION--Q&A" in this prospectus supplement.
--------
Application will be made to list the % Trust Preferred Securities
(TruPS(R)) on the New York Stock Exchange. If approved, we expect trading of
the % Trust Preferred Securities (TruPS(R)) to begin within 30 days after
they are first issued.
Investing in the Trust Preferred Securities (TruPS(R)) involves risks. See
"RISK FACTORS" beginning on page S-6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
--------
<TABLE>
<CAPTION>
Per Trust
Preferred Security Total
------------------ ----------
<S> <C> <C>
Public offering price............................ $ $
Underwriting commissions to be paid by Wisconsin
Energy Corporation.............................. See below. See below.
Proceeds to WEC Capital Trust I.................. $ $
</TABLE>
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Underwriting commissions of $ per % Trust Preferred Security (or
$ for all % Trust Preferred Securities) (TruPS(R)) will be paid by
Wisconsin Energy Corporation; except that for sales of or more % Trust
Preferred Securities (TruPS(R)) to a single purchaser, the commissions will be
$ per % Trust Preferred Security.
We expect that the % Trust Preferred Securities (TruPS(R)) will be ready
for delivery in book-entry form only through The Depository Trust Company on or
about , 1999.
"TruPS(R)" is a registered service mark of Salomon Smith Barney Inc.
Salomon Smith Barney
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Robert W. Baird & Co.
Incorporated
, 1999.
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate as of the date on the front of this prospectus
supplement only. Our business, financial condition, results of operations and
prospects may have changed since that date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Summary Information--Q&A.................................................. S-3
Risk Factors.............................................................. S-6
Use of Proceeds........................................................... S-9
Selected Financial Information............................................ S-9
Accounting Treatment...................................................... S-9
Description of Securities................................................. S-10
Certain Terms of the Preferred Securities................................. S-10
Certain Terms of the Junior Subordinated Debentures....................... S-11
United States Taxation.................................................... S-12
Underwriting.............................................................. S-17
Prospectus
About this Prospectus..................................................... 2
Forward-Looking Statements and Cautionary Factors......................... 2
Wisconsin Energy.......................................................... 2
The WEC Trusts............................................................ 3
Use of Proceeds........................................................... 5
Capitalization............................................................ 5
Ratio of Earnings to Fixed Charges........................................ 5
Description of Debt Securities............................................ 6
Description of Preferred Securities....................................... 15
Description of Guarantees................................................. 26
Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees............................... 28
Book-Entry Issuance....................................................... 30
Plan of Distribution...................................................... 32
Certain Legal Matters..................................................... 33
Experts................................................................... 34
Where You Can Find More Information....................................... 34
</TABLE>
S-2
<PAGE>
SUMMARY INFORMATION--Q&A
The following information supplements, and should be read together with, the
information contained in other parts of this prospectus supplement and in the
accompanying prospectus. This summary highlights selected information from this
prospectus supplement and the accompanying prospectus to help you understand
the % Trust Preferred Securities (TruPS(R)). You should carefully read this
prospectus supplement and the accompanying prospectus to understand fully the
terms of the preferred securities as well as the tax and other considerations
that are important to you in making a decision about whether to invest in the
preferred securities. You should pay special attention to the "RISK FACTORS"
section beginning on page S-6 of this prospectus supplement to determine
whether an investment in the preferred securities is appropriate for you.
What are the preferred securities?
Each preferred security represents an undivided beneficial interest in the
assets of WEC Capital Trust I. Each preferred security will entitle the holder
to receive quarterly cash distributions as described in this prospectus
supplement. The trust is offering 6,000,000 preferred securities at a price of
$25 for each preferred security.
Who is the trust?
The trust is a Delaware business trust. Its principal place of business is
c/o Wisconsin Energy Corporation, 231 West Michigan Street, P.O. Box 2949,
Milwaukee, Wisconsin 53201. Its telephone number is (414) 221-2345.
The trust will sell its preferred securities to the public and its common
securities to Wisconsin Energy Corporation (Wisconsin Energy). The trust will
use the proceeds from these sales to buy a series of % junior subordinated
debentures due , 2039, from Wisconsin Energy with the same financial
terms as the preferred securities. Wisconsin Energy will guarantee payments
made on the preferred securities as described below.
The First National Bank of Chicago will act as property trustee of the
trust. Two officers of Wisconsin Energy will act as administrative trustees.
First Chicago Delaware Inc. will be the Delaware trustee. The First National
Bank of Chicago will act as trustee under the indenture pursuant to which the
junior subordinated debentures will be issued, and will act as trustee under
the guarantee of Wisconsin Energy. The property trustee, Delaware trustee and
administrative trustees are sometimes referred to as the issuer trustees.
Who is Wisconsin Energy?
Wisconsin Energy is a holding company organized under the laws of Wisconsin
in 1981. It has its principal office at 231 West Michigan Street, P.O. Box
2949, Milwaukee, Wisconsin 53201. Its telephone number is (414) 221-2345.
Wisconsin Energy's principal subsidiary is Wisconsin Electric Power Company,
a regulated electric, gas and steam utility.
When will you receive quarterly distributions?
If you purchase the preferred securities, you are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per preferred security. Distributions will accumulate from the
date the trust issues the preferred securities and will be paid quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
beginning , 1999.
S-3
<PAGE>
When can payment of your distributions be deferred?
Wisconsin Energy can, on one or more occasions, defer interest payments on
the junior subordinated debentures for up to 20 consecutive quarterly periods.
A deferral of interest payments cannot extend, however, beyond the maturity
date of the junior subordinated debentures (which is , 2039).
If Wisconsin Energy defers interest payments on the junior subordinated
debentures, the trust will also defer distributions on the preferred
securities. During this deferral period, distributions will continue to accrue
on the preferred securities at an annual rate of % of the liquidation amount
of $25 per preferred security. Also, the deferred distributions will themselves
accrue interest at an annual rate of % (to the extent permitted by law). Once
Wisconsin Energy makes all interest payments on the junior subordinated
debentures, with accrued interest, it can again defer interest payments on the
junior subordinated debentures if no event of default under the junior
subordinated debentures has occurred and is continuing.
During any period in which Wisconsin Energy defers interest payments on the
junior subordinated debentures, Wisconsin Energy will not be permitted to (with
limited exceptions):
. pay a dividend or make any distributions on its capital stock or redeem,
purchase, acquire or make a liquidation payment on any of its capital
stock, or make any guarantee payments with respect to the foregoing; or
. make an interest, principal or premium payment on, or repurchase or
redeem, any of its debt securities that rank equal to or junior to the
junior subordinated debentures.
If Wisconsin Energy defers payments of interest on the junior subordinated
debentures, the preferred securities will, from the time of the deferral, be
treated as being issued with original issue discount ("OID") for United States
federal income tax purposes. This means you will be required to recognize
interest income with respect to distributions and include those amounts in your
gross income for United States federal income tax purposes even though you will
not have received any cash distributions relating to that interest income. See
"UNITED STATES TAXATION--Interest Income and Original Issue Discount."
When can the trust redeem the preferred securities?
The trust must redeem all of the outstanding preferred securities and common
securities when the junior subordinated debentures are paid at maturity on
, 2039. In addition, if Wisconsin Energy redeems any junior subordinated
debentures before their maturity date, the trust will use the cash it receives
from the redemption to redeem, on a pro rata basis, preferred securities and
common securities having a combined liquidation amount equal to the principal
amount of the junior subordinated debentures redeemed.
Wisconsin Energy can redeem some or all of the junior subordinated
debentures before their maturity at % of their principal amount on one or
more occasions at any time on or after , 2004. Wisconsin Energy also has
the option to redeem the junior subordinated debentures, in whole but not in
part, at any time if certain changes in tax or investment company law occur and
other specified conditions are satisfied, as more fully described under
"CERTAIN TERMS OF THE PREFERRED SECURITIES--Special Event Redemption." In any
case, Wisconsin Energy will pay accrued interest to the date of redemption.
What is Wisconsin Energy's guarantee of the preferred securities?
Wisconsin Energy will guarantee the preferred securities based on:
. its obligations to make payments on the junior subordinated debentures;
. its obligations under the guarantee; and
. its obligations under the trust agreement.
S-4
<PAGE>
Wisconsin Energy's obligations under the junior subordinated debentures are
subordinate and junior in right of payment to all of its senior debt. At
December 31, 1998, Wisconsin Energy's senior debt totaled about $67 million,
and its subsidiaries had additional aggregate debt of approximately $2.1
billion.
The payment of distributions on the preferred securities is guaranteed by
Wisconsin Energy under the guarantee, but only to the extent the trust has
funds legally and immediately available to make distributions.
Wisconsin Energy's obligations under the guarantee are:
. subordinate and junior in right of payment to its other liabilities;
. equal in rank to its most senior preferred stock, if any is issued; and
. senior to its common stock.
When could the junior subordinated debentures be distributed to you?
Wisconsin Energy has the right to dissolve the trust at any time. If
Wisconsin Energy dissolves the trust, the trust will liquidate (after
satisfaction of any liabilities to creditors of the trust as provided by
applicable law) by distributing the junior subordinated debentures to holders
of the preferred securities and the common securities on a pro rata basis. If
the junior subordinated debentures are distributed, Wisconsin Energy will use
its best efforts to list the junior subordinated debentures on the New York
Stock Exchange (NYSE) (or any other exchange on which the preferred securities
are then listed) in place of the preferred securities.
Will the preferred securities be listed on a stock exchange?
Application will be made to list the preferred securities on the NYSE. If
approved, trading of the preferred securities is expected to begin within 30
days after they are first issued.
Will holders of the preferred securities have any voting rights?
Generally, the holders of the preferred securities will not have any voting
rights. See "DESCRIPTION OF THE PREFERRED SECURITIES--Voting Rights; Amendment
of Each Trust Agreement" in the accompanying prospectus.
In what form will the preferred securities be issued?
The preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of The
Depository Trust Company (DTC) or its nominee. This means that you will not
receive a certificate for your preferred securities and that your broker will
maintain your position in the preferred securities. Wisconsin Energy expects
that the preferred securities will be ready for delivery through DTC on or
about , 1999.
S-5
<PAGE>
RISK FACTORS
Your investment in the preferred securities will involve certain risks. You
should carefully consider the following discussion of risks, and the other
information in this prospectus supplement and the accompanying prospectus,
before deciding whether an investment in the preferred securities is suitable
for you.
Wisconsin Energy's Obligations Under the Guarantee and the Junior Subordinated
Debentures Are Subordinated.
Wisconsin Energy's obligations under the junior subordinated debentures will
rank junior in priority of payment to all of Wisconsin Energy's senior debt.
This means that Wisconsin Energy cannot make any payments on the junior
subordinated debentures if it defaults on a payment of senior debt and does not
cure the default within the applicable grace period or if the senior debt
becomes immediately due because of a default and has not yet been paid in full.
Although this rule does not apply to a default by one of Wisconsin Energy's
subsidiaries, the subsidiaries may be unable to pay dividends or make other
distributions to Wisconsin Energy when they are in default. Dividends and other
distributions from subsidiaries are Wisconsin Energy's only ongoing source of
revenues from which to repay the junior subordinated debentures. At December
31, 1998, senior debt of Wisconsin Energy totaled approximately $67 million and
senior debt of its subsidiaries aggregated approximately $2.1 billion.
Wisconsin Energy's obligations under the guarantee will rank in priority of
payment as follows:
. subordinate and junior in right of payment to all its other liabilities;
. equal in rank to its most senior preferred stock, if any is issued; and
. senior to its common stock.
This means that Wisconsin Energy cannot make any payments on the guarantee
if it defaults on a payment on any of its other liabilities. In addition, in
the event of the bankruptcy, liquidation or dissolution of Wisconsin Energy,
its assets would be available to pay obligations under the guarantee only after
Wisconsin Energy made all payments on its other liabilities.
Neither the preferred securities, the junior subordinated debentures nor the
guarantee limit the ability of Wisconsin Energy or its subsidiaries to incur
additional debts, including debts that rank senior in priority of payment to
the junior subordinated debentures and the guarantee. See "DESCRIPTION OF
GUARANTEES--Status of the Guarantees" and "DESCRIPTION OF THE DEBT SECURITIES"
in the accompanying prospectus.
Wisconsin Energy's Subsidiaries May be Restricted in Providing Funds for
Payments to the Trust.
Because Wisconsin Energy is a holding company and conducts all of its
operations through subsidiaries, holders of debt securities will generally have
a junior position to claims of creditors of the subsidiaries, including trade
creditors, debt holders, secured creditors, taxing authorities, guarantee
holders and any preferred stockholders. Various financing arrangements and
regulatory requirements impose restrictions on the ability of Wisconsin
Energy's utility subsidiaries to transfer funds to it in the form of cash
dividends, loans or advances. Under Wisconsin law, Wisconsin Electric is
prohibited from loaning funds, either directly or indirectly, to Wisconsin
Energy. The indenture does not limit Wisconsin Energy or its subsidiaries if we
decide to issue additional debt.
The Guarantee Only Covers Payments if the Trust has Cash Available.
The ability of the trust to pay scheduled distributions on the preferred
securities, the redemption price of the preferred securities and the
liquidation amount of each preferred security is solely dependent upon
Wisconsin Energy making the related payments on the junior subordinated
debentures when due.
S-6
<PAGE>
If Wisconsin Energy defaults on its obligations to pay principal or interest
on the junior subordinated debentures, the trust will not have sufficient funds
to pay distributions, the redemption price or the liquidation amount of each
preferred security. In those circumstances, you will not be able to rely upon
the guarantee for payment of these amounts.
Instead you:
. may directly sue Wisconsin Energy or seek other remedies to collect your
pro rata share of payments owed; or
. may rely on the property trustee to enforce the trust's rights under the
junior subordinated debentures.
Deferral of Distributions Would Have Tax Consequences for You and May Affect
the Trading Price of the Preferred Securities.
So long as no event of default under the junior subordinated debentures has
occured and is continuing, Wisconsin Energy can, on one or more occasions,
defer interest payments on the junior subordinated debentures for up to 20
consecutive quarterly periods. If Wisconsin Energy defers interest payments on
the junior subordinated debentures, the trust will defer distributions on the
preferred securities during any deferral period. However, distributions would
still accumulate and the deferred distributions would themselves accrue
interest at the rate of % per annum (to the extent permitted by law).
If Wisconsin Energy defers interest payments on the junior subordinated
debentures, you will be required to recognize interest income for United States
federal income tax purposes (based on your pro rata share of the accrued
interest on the junior subordinated debentures held by the trust) before you
receive any cash relating to that interest. In addition, you will not receive
the cash if you sell the preferred securities before the end of any deferral
period or before the record date relating to distributions which are paid.
Wisconsin Energy has no current intention of deferring interest payments on
the junior subordinated debentures. However, if Wisconsin Energy exercises its
right in the future, the preferred securities may trade at a price that does
not fully reflect the value of accrued but unpaid interest on the junior
subordinated debentures. If you sell the preferred securities during an
interest deferral period, you may not receive the same return on investment as
someone else who continues to hold the preferred securities. In addition, the
existence of Wisconsin Energy's right to defer payments of interest on the
junior subordinated debentures may mean that the market price for the preferred
securities (which represent an undivided beneficial interest in the trust,
substantially all of the assets of which consist of the junior subordinated
debentures) may be more volatile than other securities that do not have these
rights.
See "UNITED STATES TAXATION" for more information regarding the tax
consequences of purchasing, holding and selling the preferred securities.
Preferred Securities May be Redeemed at Any Time if Specified Changes in Tax or
Investment Company Law Occur.
If certain changes in tax or investment company law occur and are
continuing, and other conditions are satisfied, Wisconsin Energy has the right
to redeem the junior subordinated debentures, in whole but not in part, at any
time. Any redemption will cause a mandatory redemption of all preferred
securities and common securities at a redemption price equal to $25 per
security plus any accrued and unpaid distributions.
Preferred Securities May be Redeemed at the Option of Wisconsin Energy.
At the option of Wisconsin Energy, the junior subordinated debentures may be
redeemed, in whole, at any time, or in part, from time to time, on or after
, 2004, at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest to the redemption date. See
"CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES--Redemption." You should
assume that Wisconsin Energy will exercise its redemption option if Wisconsin
Energy is able to refinance at a lower
S-7
<PAGE>
interest rate or it is otherwise in Wisconsin Energy's interest to redeem the
junior subordinated debentures. If the junior subordinated debentures are
redeemed, the trust must redeem the preferred securities and the common
securities having an aggregate liquidation amount equal to the aggregate
principal amount of junior subordinated debentures to be redeemed. See
"DESCRIPTION OF THE PREFERRED SECURITIES-- Redemption or Exchange" in the
accompanying prospectus.
There Can Be No Assurance as to the Market Prices for the Preferred Securities
or the Junior Subordinated Debentures.
The preferred securities that an investor may purchase, whether pursuant to
the offer made by this prospectus supplement or in the secondary market, or the
junior subordinated debentures that a holder of preferred securities may
receive upon a dissolution of the trust, may trade at a discount to the price
that the investor paid to purchase the preferred securities offered by this
prospectus supplement. As a result of Wisconsin Energy's right to defer
interest payments on the junior subordinated debentures, the market price of
the preferred securities (which represent undivided beneficial ownership
interests in the trust, substantially all of the assets of which consist of the
junior subordinated debentures) may be more volatile than the market prices of
other securities that are not subject to similar optional deferrals.
Wisconsin Energy May Dissolve the Trust at Any Time.
Wisconsin Energy has the right to dissolve the trust at any time. If
Wisconsin Energy decides to exercise its right to dissolve the trust, the trust
will liquidate (after satisfaction of any liabilities to creditors of the trust
as provided by applicable law) by distributing the junior subordinated
debentures to holders of the preferred securities and the common securities on
a pro rata basis.
If the trust is characterized for United States federal income tax purposes
as an association taxable as a corporation at the time it is dissolved or if
there is a change in law, the distribution of junior subordinated debentures to
you may be a taxable event to you. Under current United States federal income
tax law, a distribution of junior subordinated debentures to you on the
dissolution of the trust should not be a taxable event to you.
Wisconsin Energy has no current intention to cause the dissolution of the
trust and the distribution of the junior subordinated debentures. Wisconsin
Energy anticipates that it would consider exercising this right in the event
that expenses associated with maintaining the trust were substantially greater
than currently expected, such as if unfavorable changes in tax law or
investment company law occurred. See "DESCRIPTION OF DEBT SECURITIES--Certain
Provisions Relating to Junior Subordinated Debentures Issued to the WEC
Trusts--Redemption" in the accompanying prospectus. Wisconsin Energy cannot
predict the other circumstances under which this right would be exercised.
Although Wisconsin Energy will use its best efforts to list the junior
subordinated debentures on the NYSE (or any other exchange on which the
preferred securities are then listed) if they are distributed, we cannot assure
you that the junior subordinated debentures will be approved for listing or
that a trading market will exist for these securities.
You Have Voting Rights Only Under Limited Circumstances.
You will have limited voting rights. In particular, subject to certain
exceptions, only Wisconsin Energy can appoint or remove any of the issuer
trustees. See "DESCRIPTION OF THE PREFERRED SECURITIES--Voting Rights;
Amendment of Each Trust Agreement" in the accompanying prospectus.
S-8
<PAGE>
USE OF PROCEEDS
The trust will use all of the proceeds it receives from the sale of its
preferred securities and common securities to purchase junior subordinated
debentures from Wisconsin Energy. Wisconsin Energy intends to use the proceeds
from its sale of the junior subordinated debentures to the trust to fund a
capital contribution of approximately $105 million to Wisvest Connecticut, LLC,
an indirect wholly owned subsidiary of Wisconsin Energy, to support its
acquisition of certain generating assets from The United Illuminating Company,
and for repayment of short term borrowings. Wisconsin Energy's consolidated
short term borrowings are expected to approximate $271 million before receipt
of the proceeds from the preferred securities and bear interest at a weighted
average annual rate of approximately 4.87%.
SELECTED FINANCIAL INFORMATION
The following is a selection of certain financial information covering
Wisconsin Energy. This information is taken from our audited financial
statements contained in our Annual Report on Form 10-K for the year ended
December 31, 1997, and from our consolidated financial statements for the year
ended December 31, 1998, for which an audit report has not yet been issued. See
"WHERE YOU CAN FIND MORE INFORMATION" in the accompanying prospectus.
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
1998 1997(1) 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Income Statement Data: (Unaudited) (Dollars in millions except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Revenues.... $1,980 $1,790 $1,774 $1,770 $1,742
Operating Income...... $ 277 $ 199 $ 306 $ 329 $ 263
Net Income............ $ 188 $ 61 $ 218 $ 234 $ 181
Earnings Per Share of
Common Stock......... $ 1.65 $ 0.54 $ 1.97 $ 2.13 $ 1.67
</TABLE>
- --------
(1) In June 1997, Wisconsin Energy recorded a nonrecurring $30.7 million charge
to write-off deferred merger costs related to the terminated merger
agreement with Northern States Power Company. In December 1997, Wisconsin
Energy recorded a nonrecurring $30.0 million charge to write-down equipment
purchased for the Kimberly Cogeneration Project. In addition, 1997 earnings
decreased due to significantly higher fuel and purchased power expenses;
increased other operation and maintenance expenses; higher depreciation
expense; and retail electric and gas rate decreases that became effective
in February 1997.
ACCOUNTING TREATMENT
The trust will be treated as Wisconsin Energy's subsidiary, and the accounts
of the trust will be included in our financial statements. Currently the FASB
is considering the classification of trust preferred securities within the
balance sheet. Pending clarification from the FASB, the preferred securities
will be presented as a separate line item in our balance sheet and disclosures
concerning the preferred securities, the guarantee and the junior subordinated
debentures will be included in the notes to the financial statements. We will
record distributions paid on the preferred securities as an expense.
S-9
<PAGE>
DESCRIPTION OF SECURITIES
This prospectus supplement discloses the specific terms and provisions of
the preferred securities and the junior subordinated debentures and supplements
the general description of the terms and provisions of these securities in the
accompanying prospectus. These summaries are not meant to be a complete
description of each security. However, this prospectus supplement and the
accompanying prospectus contain the material terms and conditions for each
security. For more information, please refer to the trust agreement, the
indenture, the guarantee and the securities resolution of Wisconsin Energy
authorizing the issuance of the junior subordinated debentures. Forms of these
documents are filed as exhibits to the registration statement of which this
prospectus supplement and the accompanying prospectus are a part. All terms
used in this prospectus supplement have the meanings given to them in these
documents.
CERTAIN TERMS OF THE PREFERRED SECURITIES
Distributions
The preferred securities represent undivided beneficial interests in the
assets of the trust. Distributions on the preferred securities are cumulative
and will accumulate from the date they are first issued at the annual rate of
% of the $25 per preferred security liquidation amount. Distributions will
be payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, beginning , 1999. Distributions not paid when due
will accumulate additional distributions, compounded quarterly, at the annual
rate of % on the amount of unpaid distributions (to the extent permitted
by law). The term "distributions" includes any of these distributions. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
At any time and from time to time, so long as no event of default has
occurred and is continuing under the junior subordinated debentures, we may
defer interest payments for up to 20 consecutive quarters. However, no deferral
period will extend beyond the maturity date of the junior subordinated
debentures. The trust will similarly defer quarterly distributions on the
preferred securities during any deferral period, but the amount of
distributions due to you would continue to accumulate at the rate stated above,
compounded quarterly to the extent permitted by law.
We have no current intention to exercise our right to defer interest
payments on the junior subordinated debentures issued to the trust. If we defer
interest payments on the junior subordinated debentures, we would be subject to
certain restrictions relating to the payment of dividends on or purchases of
our capital stock and payments on our debt securities ranking equal with or
junior to the junior subordinated debentures. See "DESCRIPTION OF DEBT
SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures
Issued to the WEC Trusts--Option to Extend Interest Payment Date" in the
accompanying prospectus.
See the accompanying prospectus for additional terms of the preferred
securities, including provisions relating to the deferral of distributions, the
payment of distributions and the subordination of the common securities.
If distributions are payable on a date that is not a business day, payment
will be made on the next business day, without any interest or other payment in
respect for any delay. However, if the next business day is in the next
calendar year, payment of distributions will be made on the preceding business
day. A "business day" means each Monday, Tuesday, Wednesday, Thursday or Friday
which is not a day on which banking institutions in New York City are
authorized or obligated by law, regulation or executive order to close, or a
day on which the Federal Reserve Bank of New York is not open.
S-10
<PAGE>
Redemption
When we pay the junior subordinated debentures at maturity on ,
2039, or upon early redemption, the property trustee will use the proceeds to
redeem a like amount of the preferred and common securities. The property
trustee will give you at least 30 days, but not more than 60 days, notice
before the redemption date. The preferred and (unless there is a default under
the junior subordinated debentures) common securities will be redeemed at a
price equal to the liquidation amount of $25 per security plus accrued and
unpaid distributions to the date of redemption.
If less than all of the preferred and common securities are redeemed, then
the aggregate liquidation amount of preferred and common securities to be
redeemed will be the allocated 3% to the common securities holders, subject to
the exceptions as described in "DESCRIPTION OF PREFERRED SECURITIES--
Subordination of Common Securities" in the accompanying prospectus and 97% to
the preferred securities holders. The preferred and (unless there is a default
under the junior subordinated debentures) common securities to be redeemed will
be selected by the property trustee by a method determined to be fair and
appropriate by it subject to the subordination provisions of the common
securities.
Special Event Redemption
If a Tax Event or an Investment Company Event, each as defined in the
accompanying prospectus (each a Special Event), has occurred and is continuing,
we may redeem the junior subordinated debentures, in whole but not in part.
This will cause a mandatory redemption of the preferred securities and the
common securities, in whole but not in part and within 90 days following the
occurrence of the Special Event, at the liquidation amount of $25 per preferred
security plus unpaid distributions to the date of redemption.
However, in the case of an occurrence of a Tax Event, if we can eliminate,
within the 90 day period, the Tax Event by taking some action, such as filing a
form or making an election, or pursuing some other similar reasonable measure
which has no adverse effect on us, the trust or the preferred and common
security holders, we will pursue that action instead of redemption. We will
have no right to redeem the junior subordinated debentures while the trust or
the property trustee is pursuing any similar action based on its obligations
under the trust agreement.
See the accompanying prospectus for other redemption provisions and for
redemption procedures.
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures will be issued as a series pursuant to a
securities resolution dated as of , 1999, under the indenture. The
junior subordinated debentures are unsecured and rank subordinate and junior in
right of payment to all of our senior debt securities and subordinated debt
securities (if any).
Interest Rate and Maturity
The junior subordinated debentures will mature on , 2039, and
will bear interest at the annual rate of % of the principal amount
thereof, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, beginning , 1999. Interest payments not
paid when due will accrue additional interest compounded quarterly at the
annual rate of % on the amount of unpaid interest (to the extent permitted
by law). The term "interest payments," includes this additional interest. The
amount of interest payable for any period will be computed based on a 360-day
year of twelve 30-day months. The interest payment provisions for the junior
subordinated debentures correspond to the distribution provisions of the
preferred securities.
S-11
<PAGE>
See the accompanying prospectus for other terms of the junior subordinated
debentures, including provisions relating to the deferral of interest payments,
under "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior
Subordinated Debentures Issued to the WEC Trusts" in the accompanying
prospectus.
Redemption
We have the option to redeem the junior subordinated debentures prior to
maturity at a redemption price equal to % of the principal amount plus
accrued and unpaid interest to the redemption date (a) in whole or in part at
any time on or after , 2004, or (b) in whole but not in part if a
Special Event has occurred and is continuing.
Distribution of Junior Subordinated Debentures
If the property trustee distributes the junior subordinated debentures to
the preferred and common securities holders upon the dissolution and
liquidation of the trust, the junior subordinated debentures will be issued in
denominations of $25 and integral multiples thereof. We anticipate that the
junior subordinated debentures would be distributed in the form of one or more
global securities and DTC, or any successor depositary for the preferred
securities, would act as depositary for the junior subordinated debentures. The
depositary arrangements for the junior subordinated debentures would be
substantially similar to those in effect for the preferred securities.
For a description of DTC and the terms of the depository arrangements
relating to payments, transfers, voting rights, redemption and other notices
and other matters, see "BOOK-ENTRY ISSUANCE" in the accompanying prospectus.
UNITED STATES TAXATION
General
The following summary of the material United States federal income tax
consequences of purchasing, holding and selling the preferred securities is
based on the views of Quarles & Brady LLP, tax counsel to Wisconsin Energy.
This summary is based on (1) the Internal Revenue Code of 1986, as amended
("Code"), (2) income tax regulations issued under the Code, and (3) associated
administrative and judicial interpretations, all as they currently exist as of
the date of this prospectus supplement. These income tax laws and regulations,
however, may change at any time, and any change could be retroactive to the
issuance date of the preferred securities. As part of its fiscal year 2000
budget proposal, the Clinton Administration recently made certain proposals
aimed at curbing what have become known as "corporate tax shelters." Although
we believe that these proposals, if enacted into law in their current form, are
not likely to apply to the issuance of the preferred securities (based on both
their substance and the proposed effective date), because no specific statutory
language has been proposed and because the proposed effective date is subject
to change, the effect of the Clinton Administration's fiscal year 2000 budget
proposal is uncertain.
These income tax laws and regulations are also subject to various
interpretations, and the Internal Revenue Service ("IRS") or the courts could
later disagree with what we explain in this summary. The IRS has not formally
ruled (and we do not intend to seek a ruling) on the tax consequences of
purchasing, holding and selling the preferred securities. Accordingly, the IRS
could challenge the opinions expressed in this prospectus supplement concerning
such consequences, and a court could agree with the IRS.
Except where we state otherwise, this summary deals only with preferred
securities held as a capital asset (as defined in section 1221 of the Code) by
a holder who (a) purchases the preferred securities at their original offering
price when the trust originally issues them (an "Initial Holder") and (b) is a
US Holder (as defined below).
S-12
<PAGE>
We do not address all of the tax consequences that may be relevant to a US
Holder. We also do not address, except as stated below, any of the tax
consequences to holders that are not US Holders or to holders that may be
subject to special tax treatment such as banks, thrift institutions, real
estate investment trusts, regulated investment companies, insurance companies,
brokers and dealers in securities or currencies, tax-exempt investors or
persons that will hold the preferred securities as a position in a "straddle,"
as part of a "hedge," or as part of a "conversion transaction" or other
integrated investment. Further, we do not address:
. the United States federal income tax consequences to shareholders in, or
partners or beneficiaries of, a holder of the preferred securities;
. the United States federal alternative minimum tax consequences of the
purchase, ownership or sale of the preferred securities; or
. any state, local or foreign tax consequences of the purchase, ownership
and sale of preferred securities.
A "US Holder" is a preferred securities holder who or which is:
. a United States citizen or resident individual (or someone treated as a
citizen or resident individual for United States federal income tax
purposes);
. a corporation (including an entity treated as a corporation for United
States federal income tax purposes) created or organized in or under the
laws of the United States or any state or other political subdivision;
. an estate if its income is subject to United States federal income
taxation regardless of its source; or
. a trust if (1) a United States court can exercise primary supervision
over its administration and (2) one or more United States persons have
the authority to control all of its substantial decisions.
A "Non-US Holder" is a preferred securities holder other than a US Holder.
Characterization of the Trust
When the trust issues the preferred securities, Quarles & Brady LLP, tax
counsel to us and the trust, will give a legal opinion stating that under
current law and based on the representations, facts and assumptions described
in this prospectus supplement and the accompanying prospectus, and assuming
full compliance with the terms of the trust agreement, the underwriting
agreement governing the sale of the preferred securities by us to the
underwriters and the indenture (and other relevant documents), the trust will
be characterized for United States federal income tax purposes as a grantor
trust and will not be taxable as a corporation. Accordingly, for United States
federal income tax purposes, you will be treated as the beneficial owner of a
pro rata undivided interest in the junior subordinated debentures. You must
include in your gross income for United States federal income tax purposes all
interest on and any gain recognized with respect to your pro rata share of the
junior subordinated debentures.
Characterization of the Junior Subordinated Debentures
We and the trust will agree to treat the junior subordinated debentures as
debt for United States federal income tax purposes. By accepting the preferred
securities, you agree to treat the junior subordinated debentures as debt and
to accept the preferred securities as evidence of an indirect beneficial
ownership interest in the junior subordinated debentures. We can give no
assurance that this position will not be challenged by the IRS, however, or
that such a challenge would not be successful.
S-13
<PAGE>
Interest Income and Original Issue Discount
Under applicable income tax regulations, if there is only a remote
likelihood that a company will not make its interest payments on time, then the
debt will be considered to be issued without OID. We believe that the
likelihood that we will elect to defer interest payments is remote, since this
would prevent us from declaring dividends on any of our capital stock or making
payments on our debt securities which rank equal with or junior to the junior
subordinated debentures until we made up all of the missed interest payments.
Accordingly, we will take the position that the junior subordinated debentures
will not be issued with OID. As a result, the interest payments on the junior
subordinated debentures (which are used to make distributions on the preferred
securities) generally will be taxable to you as ordinary income when they are
paid or accrued depending on your method of United States federal income tax
accounting.
If, however, we elect to defer payments of interest, the junior subordinated
debentures would at that time be treated as re-issued with OID, and all
remaining interest payments would be treated as OID. In that case, all of your
taxable interest income on the junior subordinated debentures would have to be
included in your gross income for United States federal income tax purposes as
it accrued daily on an economic accrual basis even if you otherwise used a cash
basis method of tax accounting. This means that you would include interest
income for tax purposes, and pay United States federal income taxes, on the
interest income you should have received on the interest payment dates even
though we did not actually make cash interest payments on those dates.
If the likelihood that we will decide to defer any payments of interest were
not treated as remote, the junior subordinated debentures would be considered
as issued initially with OID in an amount equal to the sum of all the interest
payable over the term of the junior subordinated debentures. Again, this would
mean that you would have to include interest income in gross income for United
States federal income tax purposes as it accrued daily on an economic accrual
basis instead of on the dates you actually receive the cash payments.
The IRS has not issued any rulings or interpretation which define the
meaning of the term "remote" as used in the applicable income tax regulations.
The IRS could take a position that differs from what we state in this
prospectus supplement.
Corporate US Holders
Because the income from the preferred securities will not be considered to
be dividends for United States federal income tax purposes, corporate US
Holders of the preferred securities will not be entitled to a dividends-
received deduction for any income from the preferred securities.
Market Discount and Acquisition Premium
Holders of the preferred securities other than Initial Holders may be
considered to have acquired their undivided interests in the junior
subordinated debentures with market discount or acquisition premium (as each
phrase is defined for United States federal income tax purposes). Such holders
are urged to consult with their own tax advisors concerning the tax
consequences of purchasing, owning and selling the preferred securities.
Sales of Preferred Securities
If you sell your preferred securities, you will recognize a gain or loss
equal to the difference between the amount realized from the sale of the
preferred securities (generally, your selling price minus any portion
attributable to accrued but unpaid interest not otherwise includible as OID)
and your adjusted tax basis in the preferred securities. If we do not defer
interest on the junior subordinated debentures, your adjusted tax basis in the
preferred securities generally will equal the initial purchase price that you
paid for the preferred securities. If, however, we elect to defer interest
payments on the junior subordinated debentures, your adjusted tax basis in the
preferred securities generally will equal (1) the initial purchase price that
you paid for the preferred securities plus (2) any accrued and unpaid
distributions that you were required to treat as OID.
S-14
<PAGE>
Except to the extent of any accrued market discount, a gain or loss on the
sale of preferred securities generally will be a capital gain or loss if the
preferred securities are held as capital assets. The maximum regular United
States federal income tax rate on capital gains for individual taxpayers is
currently 20% for sales and exchanges of capital assets held for more than one
year. All net capital gains of a corporate taxpayer are subject to tax at
ordinary corporate income tax rates of up to 35%. Subject to limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
If you sell your preferred securities between record dates for payments of
distributions on the preferred securities, you will be required to include in
gross income for United States federal income tax purposes accrued and unpaid
interest not previously included in gross income through the date of sale, to
the extent you were not otherwise required to report this income as OID.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
Under certain circumstances, as described in the accompanying prospectus
under "DESCRIPTION OF PREFERRED SECURITIES--Liquidation Distribution Upon
Dissolution," the property trustee may distribute the junior subordinated
debentures to you in exchange for your preferred securities. This will result
in the liquidation and termination of the trust. Such a distribution would not
be a taxable event for United States federal income tax purposes, and you would
have an aggregate adjusted tax basis in the junior subordinated debentures you
received equal to your aggregate adjusted tax basis in your preferred
securities. For a description of adjusted tax basis, see the discussion above
in "Sales of Preferred Securities."
Further, the holding period of the junior subordinated debentures you
received would be the same as the period for which you held your preferred
securities. If, however, the distribution were caused by a Tax Event and the
trust was taxable as a corporation, the distribution would be a taxable event
for United States federal income tax purposes. In that case, you could
recognize a gain or loss, your adjusted tax basis in the junior subordinated
debentures could differ from your adjusted tax basis in the preferred
securities, and your holding period for the junior subordinated debentures
would not include the period during which you held the preferred securities.
The junior subordinated debentures may be redeemed for cash under certain
circumstances, and the proceeds would be used by the property trustee to redeem
a like amount of preferred securities. Such a redemption of preferred
securities would be a taxable event for United States federal income tax
purposes, and you would recognize gain or loss as if you had sold the preferred
securities for cash. See "Sales of Preferred Securities" above.
Non-US Holders
Payments to a Non-US Holder will generally not be subject to United States
federal withholding tax, provided the holder:
. does not own (directly or indirectly, actually or constructively) 10% or
more of the total combined voting power of all classes of stock of
Wisconsin Energy entitled to vote;
. is not a controlled foreign corporation that is related to Wisconsin
Energy actually or constructively through stock ownership; and
. is not a bank receiving interest described in section 881(c)(3)(A) of
the Code.
To qualify for this exemption from withholding, the last United States payer
in the chain of payment prior to payment to a Non-US Holder ("Withholding
Agent") must have received a statement that:
. is signed by the holder of the preferred securities under penalties of
perjury;
. certifies that such holder is not a US Holder; and
. provides the name and address of the holder.
S-15
<PAGE>
The statement may be made on an appropriate IRS Form W-8 or a substantially
similar form, and the holder must inform the Withholding Agent of any change in
the information on the statement within 30 days of the change. Unless a change
in the information on the statement occurs, the statement will be valid through
the end of the third calendar year following the year in which the statement is
signed. If the preferred securities are held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent along with
a copy of the appropriate IRS Form W-8 or the substitute form provided by the
holder.
A Non-US Holder will generally not be subject to United States federal
withholding or income tax on any gain realized upon the sale or other
disposition of the preferred securities. However, if a Non-US Holder holds the
preferred securities in connection with a trade or business conducted in the
United States, or is present in the United States in certain circumstances, the
holder may be subject to income tax on all income and gains recognized.
Backup Withholding
You may be subject to a "backup withholding" tax of 31% on distributions
made on the preferred securities and on the entire price received on the sale
of the preferred securities if you:
. fail to provide your social security or taxpayer identification number
to your broker;
. provide your broker with an incorrect social security or tax
identification number;
. fail to provide your broker with a certified statement that your social
security or tax identification number is correct and that you are not
subject to backup withholding; or
. improperly report interest and dividends on your tax return.
Backup withholding, however, may not apply to interest payments made to certain
exempt recipients such as corporations or tax-exempt organizations.
Backup withholding generally will not apply to payments made to a Non-US
Holder who provides the required certificate or otherwise establishes an
exemption from backup withholding. Payments of the proceeds of a disposition of
the preferred securities by a United States office of a broker generally will
be subject to backup withholding at a rate of 31% unless the Non-US Holder
certifies under penalties of perjury that it is a Non-US Holder or otherwise
establishes an exemption.
Any withheld amounts will be allowed as a credit against your United States
federal income tax, provided the required information is provided to the IRS.
The tax information above is intended only as a summary of material United
States federal tax consequences of an investment in the trust. We urge you to
consult with your own tax advisor as to the United States federal, state,
local, foreign and other tax consequences associated with purchasing, owning
and selling the preferred securities. The statements of United States tax laws
described above are based on the laws in force as of the date of this
prospectus supplement, and are subject to any changes in United States law
occurring after that date.
S-16
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions of the underwriting agreement
dated , 1999, each underwriter named below, for whom Salomon Smith Barney
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co.
Inc., and Robert W. Baird & Co. Incorporated are acting as representatives,
has severally agreed to purchase from the trust, and the trust has agreed to
sell to such underwriter, the number of preferred securities set forth
opposite the name of such underwriter below.
<TABLE>
<CAPTION>
Number of
Name Preferred Securities
---- --------------------
<S> <C>
Salomon Smith Barney Inc.............................
Merrill Lynch, Pierce, Fenner & Smith Incorporated...
Bear, Stearns & Co. Inc..............................
Robert W. Baird & Co. Incorporated...................
----------
Total............................................ 6,000,000
==========
</TABLE>
The underwriters are obligated to take and pay for the total number of
preferred securities offered hereby if any such preferred securities are
purchased. In the event of default by any underwriter, the underwriting
agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated.
The underwriting agreement provides that we and the trust will indemnify
the several underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Our expenses associated with the offer and sale of the preferred securities
are estimated to be $ .
In view of the fact that the proceeds of the sale of the preferred
securities will ultimately be used to purchase our junior subordinated
debentures, the underwriting agreement provides that we will pay as
compensation to the underwriters $ per preferred security for the
accounts of the several underwriters ($ in the aggregate); provided that
such compensation will be $ per preferred security for sales of
or more preferred securities to a single purchaser. Therefore, to the extent
of such sales, the actual amount of underwriters' compensation will be less
than the aggregate amount specified in the preceding sentence.
The underwriters propose to offer the preferred securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this prospectus supplement, and to certain dealers at such price
less a concession of $ per preferred security. The underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
preferred security to certain brokers and dealers. After the preferred
securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the representatives of the
underwriters.
Application will be made to list the preferred securities on the NYSE. If
approved, trading of the preferred securities on the NYSE is expected to
commence within a 30-day period after the initial delivery of the preferred
securities. Prior to this offering, there has been no public market for the
preferred securities. In order to meet one of the requirements for listing the
preferred securities on the NYSE, the underwriters will undertake to sell lots
of 100 or more preferred securities to a minimum of 400 beneficial holders.
S-17
<PAGE>
We and the trust have agreed, during the period of 30 days from the date of
the underwriting agreement, not to sell, offer to sell, grant any option for
the sale of, or otherwise dispose of any preferred securities, any security
convertible into or exchangeable into or exercisable for preferred securities
or the junior subordinated debentures or any debt securities substantially
similar to the junior subordinated debentures or equity securities
substantially similar to the preferred securities (except for the junior
subordinated debentures and the preferred securities issued pursuant to the
underwriting agreement), without the prior written consent of the
representatives.
In order to facilitate the offering of the preferred securities, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the preferred securities. Specifically, the underwriters
may overallot in connection with the offering, creating a short position in the
preferred securities for their own account. In addition, to cover
overallotments or to stabilize the price of the preferred securities, the
underwriters may bid for, and purchase, the preferred securities in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the preferred securities
in the offering, if the syndicate repurchases previously distributed preferred
securities in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the preferred securities above independent market levels.
The underwriters are not required to engage in these activities, and if
commenced, may end any of these activities at any time.
Certain of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment and/or commercial banking services to
us and our affiliates in the ordinary course of business.
S-18
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 12, 1999
PROSPECTUS
$300,000,000
WISCONSIN ENERGY CORPORATION
Debt Securities
-----------
WEC CAPITAL TRUST I
WEC CAPITAL TRUST II
Preferred Securities
Fully and Unconditionally Guaranteed
as described herein by
Wisconsin Energy Corporation
THE WEC TRUSTS:
. will issue and sell preferred securities (representing undivided
beneficial interests in a trust) to the public;
. will issue and sell common securities to Wisconsin Energy; and
. will use the proceeds from these sales to buy a series of junior
subordinated debentures from Wisconsin Energy with terms that correspond
to the preferred securities.
WISCONSIN ENERGY:
. will pay principal and interest on the junior subordinated debentures,
subject to payment on its more senior debt;
. may choose to distribute these junior subordinated debentures pro-rata to
the preferred and common securities holders if it dissolves the trust;
. will fully and unconditionally guarantee the preferred securities on a
junior subordinated level based on:
l its obligations to make payments on the corresponding junior
subordinated debentures;
l its obligations under the preferred securities guarantee (its payment
obligations are subject to payment on all of its general liabilities);
and
l its obligations under the trust agreement; and
. may also issue and sell other debt securities to the public.
We urge you to read this prospectus and the prospectus supplement carefully
before you make your investment decision.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 1999.
<PAGE>
ABOUT THIS PROSPECTUS
In this prospectus, "we" and "Wisconsin Energy" refer to Wisconsin Energy
Corporation and a "trust" or "WEC Trust" refers to either WEC Capital Trust I
or WEC Capital Trust II, which are the Delaware statutory business trusts that
we have formed to issue the preferred securities.
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process,
Wisconsin Energy or the WEC Trusts may issue and sell to the public any
combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $300,000,000.
This prospectus provides you with only a general description of the
securities we or the WEC Trusts may issue and sell. Each time we or the trusts
issue and sell securities, we will provide a prospectus supplement that will
contain specific information about the particular securities and terms of that
offering. In the prospectus supplement, we will describe the interest rate,
payment dates, maturity and other terms of any debt securities that we issue
and sell, and the rights to periodic cash distributions, payments on
liquidation and other terms of a trust's preferred securities. The prospectus
supplement will also describe the proceeds and uses of proceeds from the
securities, together with the names and compensation of the underwriters
through whom the securities are being issued and sold, and other important
considerations for investors. It may also add to, update or change information
contained in this prospectus.
Unless we say otherwise in the prospectus supplement, we may redeem our debt
securities for cash, or cause the trusts to liquidate and give investors our
debt securities in place of the trusts' preferred securities.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
We have included or may include statements in this prospectus and any
prospectus supplement (including documents incorporated by reference) that
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You will be able to recognize a
forward-looking statement because it contains the words "anticipate,"
"believe," "estimate," "expect," "project," "objective" or a similar expression
to identify it as a forward-looking statement.
We caution you that any such forward-looking statements are not guarantees
of future performance and involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements
to differ materially from the future results, performance or achievements we
have anticipated in such forward-looking statements.
In addition to the assumptions and other factors referred to specifically in
connection with those statements, factors that could cause our actual results
to differ materially from those contemplated in the forward-looking statements
include factors we have described under the captions "Factors Affecting Results
of Operations" and "Cautionary Factors" in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section of our
Annual Report on Form 10-K or under similar captions in the other documents we
have incorporated by reference.
WISCONSIN ENERGY
We were incorporated in the state of Wisconsin in 1981 and became a holding
company in 1986. Our principal subsidiary is Wisconsin Electric Power Company,
an electric, gas and steam utility. We also have subsidiaries engaged in
various non-utility businesses. We conduct our operations in the following four
business segments.
. Electric Operations: Our Wisconsin electric operations generate,
transmit, distribute and sell electric energy in a territory of
approximately 12,000 square miles with a population estimated at
2,300,000 in southeastern (including the metropolitan Milwaukee area),
east central and northern Wisconsin and in the Upper Peninsula of
Michigan. In May 1998, we acquired Edison Sault Electric
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Company, an electric utility which serves approximately 21,000
residential, commercial and industrial customers in Michigan's eastern
Upper Peninsula. We operate Wisconsin Electric and Edison Sault as
separate utility subsidiaries within their existing historical service
territories. Wisconsin Electric and Edison Sault continue to be
separately regulated by their respective states.
. Gas Operations: Our Wisconsin gas operations purchase, distribute and
sell natural gas to retail customers and transport customer-owned gas in
four distinct service areas of about 2,800 square miles in Wisconsin:
west and south of the City of Milwaukee, the Appleton area, the Prairie
du Chien area and northern Wisconsin. The gas service territory, which
has an estimated population of approximately 1,200,000, is largely
within Wisconsin Electric's electric service area.
. Steam Operations: Our steam operations generate, distribute and sell
steam supplied by Wisconsin Electric's Valley and Milwaukee County Power
Plants. Steam is used by customers for space heating and process
applications in the metropolitan Milwaukee area.
. Non-Utility Operations: Our non-utility subsidiaries are devoted
primarily to stimulating economic growth in the Wisconsin Electric
service area and to capitalizing on diversified investment opportunities
for stockholders.
We are an exempt holding company by order of the SEC under Section 3(a)(1)
of the Public Utility Holding Company Act of 1935, as amended. As a result, we
are exempt from the provisions of that Act, other than with respect to certain
acquisitions of securities of a public utility. Our principal executive
offices are located at 231 West Michigan Street, P.O. Box 2949, Milwaukee,
Wisconsin 53201. Our telephone number is (414) 221-2345.
THE WEC TRUSTS
Each WEC Trust is a statutory business trust that we have formed under
Delaware law. For each trust there is a trust agreement signed by us as
depositor, by The First National Bank of Chicago as property trustee, by First
Chicago Delaware Inc. as Delaware trustee and by two of our employees as
administrative trustees. For each trust there is also a certificate of trust
filed with the Delaware Secretary of State. When we are ready to issue and
sell securities through the trust, the trust agreement will be amended to read
substantially like the form of amended and restated trust agreement that is
filed with the SEC as an exhibit to the registration statement of which this
prospectus is a part. Each trust agreement will be qualified as an indenture
under the Trust Indenture Act of 1939.
The Issuance and Sale of the Trust Securities
We have created each WEC Trust solely to:
. issue and sell its trust securities (including the preferred securities
and the common securities), which represent proportionate beneficial
ownership interests in that WEC Trust and its assets;
. use the proceeds from the sale of the trust securities to buy from us a
series of our junior subordinated debentures, which will be the only
assets of that WEC Trust;
. maintain its status as a grantor trust for federal income tax purposes;
and
. engage in only those other activities necessary or convenient to
accomplish the other purposes.
Because the WEC Trusts' only assets will be junior subordinated debentures
that we issue to them, our payments on those debt securities will be the only
source of funds to be paid to purchasers or owners of the trust securities.
Each of the WEC Trusts is a separate legal entity, so the assets of one will
not be available to satisfy the obligations of any other similar trust we may
create.
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We will acquire and own all of the common securities of each WEC Trust. The
common securities will have an aggregate liquidation amount of at least 3% of
the total capital of each WEC Trust. The remainder, representing up to 97% of
the ownership interests in the WEC Trust, will be preferred securities of the
WEC Trust which may be sold to the public. The common securities and the
preferred securities will have substantially the same terms, including the same
priority of payment, and will receive proportionate payments from the WEC Trust
in respect of distributions and payments upon liquidation, redemption or
otherwise at the same times, with one exception: if we default on the
corresponding junior subordinated debentures that we issue to the WEC Trust and
do not cure the default within the times specified in the indenture governing
our issuance of our junior subordinated debentures, our rights to payments as
holder of the common securities will be subordinated to the rights of the
holders of the preferred securities. See "DESCRIPTION OF PREFERRED SECURITIES--
Subordination of Common Securities."
Unless we say otherwise in the applicable prospectus supplement, each WEC
Trust will have a term of approximately 50 years. However, a WEC Trust may
dissolve earlier as provided in the applicable trust agreement and the
prospectus supplement.
Each WEC Trust's business and affairs will be conducted by its trustees,
whom we will appoint as holder of the common securities. Unless we say
otherwise in the applicable prospectus supplement, the trustees for each WEC
Trust will be:
. The First National Bank of Chicago, as the property trustee
. First Chicago Delaware Inc., as the Delaware trustee
. Two of our officers, as individual administrative trustees.
We refer to all of these trustees collectively as the "issuer trustees." The
First National Bank of Chicago, as property trustee, will act as sole indenture
trustee under each trust agreement for purposes of compliance with the Trust
Indenture Act. Unless we say otherwise in the applicable prospectus supplement,
The First National Bank of Chicago will also act as trustee under our guarantee
agreement relating to the preferred securities. See "DESCRIPTION OF GUARANTEES"
and "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior
Subordinated Debentures Issued to the WEC Trusts."
As the holder of the common securities of a WEC Trust, we will ordinarily
have the right to appoint, remove or replace the property trustee or the
Delaware trustee for each WEC Trust. However, if we are in default with respect
to the corresponding junior subordinated debentures issued to that WEC Trust
(and we haven't cured that default within the time specified in the indenture),
then the holders of a majority in liquidation amount of that WEC Trust's
outstanding preferred securities will be entitled to appoint, remove or replace
the property trustee and/or the Delaware trustee. In no event will the holders
of the preferred securities have the right to vote to appoint, remove or
replace the administrative trustees; we retain that right exclusively as the
holder of the common securities. The duties and obligations of each issuer
trustee are governed by the applicable trust agreement.
Pursuant to the indenture and the trust agreement, we promise to pay all
fees and expenses related to each WEC Trust and the offering of the preferred
securities and will pay, directly or indirectly, all ongoing costs, expenses
and liabilities of each WEC Trust, except obligations under the preferred
securities and the common securities.
The WEC Trusts have no separate financial statements. Separate financial
statements would not be material to holders of the preferred securities because
the WEC Trusts have no independent operations. They exist solely for the
limited functions summarized above. We will guarantee the preferred securities
as described later in this prospectus.
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The principal executive office of each WEC Trust is c/o Wisconsin Energy
Corporation, 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin
53201, and its telephone number is (414) 221-2345.
USE OF PROCEEDS
Each WEC Trust will use all of the proceeds it receives from the sale of its
trust securities (including both the preferred securities and the common
securities) to purchase from us the corresponding junior subordinated
debentures that will provide the funds for the trust's payments to purchasers
of its trust securities. Except as otherwise described in the applicable
prospectus supplement, we intend to use the net proceeds from the sale of our
debt securities (either to the trusts or directly to the public) for
investments (including funding equity contributions to affiliates), for
repayment of borrowings, and/or for general corporate purposes. We may
temporarily invest any funds not required immediately for those purposes in
short-term marketable securities. We expect to borrow money or sell securities
from time to time, but we cannot predict the precise amounts or timing of doing
so. For current information, look at our current filings with the SEC. See
"WHERE YOU CAN FIND MORE INFORMATION."
CAPITALIZATION
The following table summarizes our historical capitalization as of December
31, 1998, and our capitalization as adjusted to reflect the assumed issuance
and sale of an aggregate of $300 million liquidation amount of preferred
securities and the related common securities of the trusts. The long-term debt
shown does not include $119 million of long term debt due within one year.
<TABLE>
<CAPTION>
December 31, 1998
(Unaudited)
---------------------
Actual As Adjusted
------ --------------
Amount Amount Percent
------ ------ -------
(Dollars in millions)
<S> <C> <C> <C>
Capital Structure:
Long Term Debt......................................... $1,749 $1,749 43.9%
Company-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely
Debentures of the Company............................. -- 300 7.5%
Preferred Stock of Wisconsin Electric Power Company
Without Mandatory Redemption Requirements............. 31 31 0.8%
Common Equity.......................................... 1,903 1,903 47.8%
------ ------ -----
Total Capitalization................................. $3,683 $3,983 100.0%
====== ====== =====
Short Term Debt.......................................... $ 287 $ 101 2.5%
====== ====== =====
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
Our historical ratios of earnings to fixed charges are described below for
the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............... 2.8x 1.7x 4.0x 4.1x 3.4x
</TABLE>
These computations include us and our subsidiaries. For these ratios,
"earnings" is determined by adding net income (including total allowances for
funds used during construction) plus current and deferred income taxes. "Fixed
charges" consists of interest charges, amortization of debt expenses, amounts
representing the interest factors of nuclear fuel rental expense and for a
long-term power purchase contract accounted for as a capital lease, and an
amount equal to the earnings before income taxes that would be required to pay
preferred dividends of wholly owned subsidiaries. See "WHERE YOU CAN FIND MORE
INFORMATION."
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DESCRIPTION OF DEBT SECURITIES
The debt securities, including any junior subordinated debentures that we
issue to a WEC Trust, will be our direct unsecured general obligations. The
debt securities will be either senior debt securities, subordinated debt
securities or junior subordinated debt securities, including the junior
subordinated debentures that are issued to the WEC Trusts. The debt securities
will be issued in one or more series under the indenture described above
between us and The First National Bank of Chicago, as trustee and under a
securities resolution (which may be in the form of a resolution or a
supplemental indenture) authorizing the particular series.
We have summarized selected provisions of the indenture below. The summary
is not complete. The form of the indenture and a form of securities resolution
are filed as exhibits to the registration statement of which this prospectus is
a part. The securities resolution for each series also has been or will be
filed or incorporated by reference as an exhibit to the registration statement.
You should read the indenture and the applicable securities resolution for
provisions that may be important to you. In the summary below, we have included
references to section numbers in the indenture so that you can easily find
those provisions. The particular terms of any debt securities we offer will be
described in the related prospectus supplement, along with any applicable
modifications of or additions to the general terms of the debt securities
described below and in the indenture. For a description of the terms of any
series of debt securities, you should also review both the prospectus
supplement relating to that series and the description of the debt securities
set forth in this prospectus before making an investment decision.
General
The indenture does not significantly limit our operations. In particular, it
does not:
. limit the amount of debt securities that we can issue under the
indenture;
. limit the number of series of debt securities that we can issue from
time to time;
. restrict the total amount of debt that we or our subsidiaries may incur;
or
. contain any covenant or other provision that is specifically intended to
afford any holder of the debt securities special protection in the event
of highly leveraged transactions or any other transactions resulting in
a decline in our ratings or credit quality.
As of the date of this prospectus, there are no debt securities outstanding
under the indenture. The ranking of a series of debt securities with respect to
all of our indebtedness will be established by the securities resolution
creating the series.
Although the indenture permits the issuance of debt securities in other
forms or currencies, the debt securities covered by this prospectus will only
be denominated in U.S. dollars in registered form without coupons, unless
otherwise indicated in the applicable prospectus supplement.
Terms
A prospectus supplement and a securities resolution relating to the offering
of any series of debt securities will include specific terms relating to the
offering. The terms will include some or all of the following:
. the designation, aggregate principal amount, currency or composite
currency and denominations of the debt securities;
. the price at which the debt securities will be issued and, if an index,
formula or other method is used, the method for determining amounts of
principal or interest;
. the maturity date and other dates, if any, on which the principal of the
debt securities will be payable;
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<PAGE>
. the interest rate or rates, if any, or method of calculating the
interest rate or rates which the debt securities will bear;
. the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest;
. the manner of paying principal and interest on the debt securities;
. the place or places where principal and interest will be payable;
. the terms of any mandatory or optional redemption of the debt securities
by us, including any sinking fund;
. the terms of any conversion or exchange right;
. the terms of any redemption of debt securities at the option of holders;
. any tax indemnity provisions;
. if payments of principal or interest may be made in a currency other
than U.S. Dollars, the manner for determining such payments;
. the portion of principal payable upon acceleration of any discounted
debt security (as described below);
. whether and upon what terms debt securities may be defeased (which means
that we would be discharged from our obligations by depositing
sufficient cash or government securities to pay the principal, interest,
any premiums and other sums due to the stated maturity date or a
redemption date of the debt securities of the series);
. whether any events of default or covenants in addition to or instead of
those set forth in the indenture apply;
. provisions for electronic issuance of debt securities or for debt
securities in uncertificated form;
. the ranking of the debt securities, including the relative degree, if
any, to which the debt securities of such series are subordinated to one
or more other series of debt securities in right of payment, whether
outstanding or not;
. any provisions relating to extending or shortening the date on which the
principal and premium, if any, of the debt securities of the series is
payable;
. any provisions relating to the deferral of payment of any interest;
. if the series of debt securities is to be issued to a WEC Trust, the
forms of the related trust agreement and guarantee agreement;
. the additions or changes, if any, to the indenture with respect to that
series of debt securities to permit or facilitate the issuance of that
series of debt securities to a WEC Trust; and
. any other terms not inconsistent with the provisions of the indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or
advisable in connection with the marketing of the debt securities.
(Section 2.01)
We may issue debt securities of any series as registered debt securities,
bearer debt securities or uncertificated debt securities, and in such
denominations as we specify in the securities resolution and prospectus
supplement for the series. (Section 2.01)
In connection with its original issuance, no bearer debt security will be
offered, sold or delivered to any location in the United States. We may deliver
a bearer debt security in definitive form in connection with its original
issuance only if a certificate in a form we specify to comply with United
States laws and regulations is presented to us. (Section 2.04)
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<PAGE>
A holder of registered debt securities may request registration of a
transfer upon surrender of the debt security being transferred at any agency we
maintain for that purpose and upon fulfillment of all other requirements of the
agent. (Sections 2.03 and 2.07)
We may issue debt securities under the indenture as discounted debt
securities to be offered and sold at a substantial discount from the principal
amount of those debt securities. Special United States federal income tax and
other considerations applicable to discounted debt securities will be described
in the related prospectus supplement. A discounted debt security is a debt
security where the amount of principal due upon acceleration is less than the
stated principal amount. (Sections 1.01 and 2.10)
Conversion and Exchange
The terms, if any, on which debt securities of any series will be
convertible into or exchangeable for our common stock or other equity or debt
securities, property, cash or obligations or a combination of any of the
foregoing, will be summarized in the prospectus supplement relating to the
series. The terms may include provisions for conversion or exchange, either on
a mandatory basis, at the option of the holder or at our option. (Section 9.01)
Certain Covenants
Any restrictive covenants which may apply to a particular series of debt
securities will be described in the related prospectus supplement.
Ranking of Debt Securities
Unless stated otherwise in a prospectus supplement, the debt securities
issued under the indenture will rank equally and ratably with our other
unsecured and unsubordinated debt. The debt securities will not be secured by
any properties or assets and will represent our unsecured debt.
Because we are a holding company and conduct all of our operations through
subsidiaries, holders of debt securities will generally have a junior position
to claims of creditors of our subsidiaries, including trade creditors, debt
holders, secured creditors, taxing authorities, guarantee holders and any
preferred stockholders. Various financing arrangements and regulatory
requirements impose restrictions on the ability of our utility subsidiaries to
transfer funds to us in the form of cash dividends, loans or advances. Under
Wisconsin law, Wisconsin Electric is prohibited from loaning funds, either
directly or indirectly, to us. The indenture does not limit us or our
subsidiaries if we decide to issue additional debt. Some of our operating
subsidiaries have ongoing corporate debt programs used to finance their
business activities. As of December 31, 1998, our subsidiaries had
approximately $2.1 billion of outstanding debt, and preferred stock issued by
Wisconsin Electric was entitled to annual dividends of approximately $1.2
million.
Successor Obligor
The indenture provides that, unless otherwise specified in the securities
resolution establishing a series of debt securities, we will not consolidate
with or merge into, or transfer all or substantially all of our assets to,
another company, unless:
. that company is organized under the laws of the United States or a state
or is organized under the laws of a foreign jurisdiction and consents to
the jurisdiction of the courts of the United States or a state;
. that company assumes by supplemental indenture all of our obligations
under the indenture, the debt securities and any coupons;
. all required approvals of any regulatory body having jurisdiction over
the transaction shall have been obtained; and
. immediately after the transaction no default exists under the indenture.
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<PAGE>
The successor shall be substituted for us as if it had been an original
party to the indenture, securities resolutions and debt securities. Thereafter
the successor may exercise our rights and powers under the indenture, the debt
securities and any coupons, and all of our obligations under those documents
will terminate. (Section 5.01)
Exchange of Debt Securities
Registered debt securities may be exchanged for an equal principal amount of
registered debt securities of the same series and date of maturity in the
denominations requested by the holders upon surrender of the registered debt
securities at an agency we maintain for that purpose and upon fulfillment of
all other requirements of the agent. (Section 2.07)
Defaults and Remedies
Unless the securities resolution establishing the series provides for
different events of default, in which event the prospectus supplement will
describe the change, an event of default with respect to a series of debt
securities will occur if:
. we default in any payment of interest on any debt securities of that
series when the payment becomes due and payable and the default
continues for a period of 60 days;
. we default in the payment of the principal and premium, if any, of any
debt securities of the series when those payments become due and payable
at maturity or upon redemption, acceleration or otherwise;
. we default in the payment or satisfaction of any sinking fund obligation
with respect to any debt securities of the series as required by the
securities resolution establishing the series and the default continues
for a period of 60 days;
. we default in the performance of any of our other agreements applicable
to the series and the default continues for 90 days after the notice
specified below;
. pursuant to or within the meaning of any Bankruptcy Law we:
--commence a voluntary case,
--consent to the entry of an order for relief against us in an
involuntary case,
--consent to the appointment of a custodian for us or for all or
substantially all of our property, or
--make a general assignment for the benefit of our creditors;
. a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that remains unstayed and in effect for 60 days and that:
--is for relief against us in an involuntary case,
--appoints a custodian for us or for all or substantially all of our
property, or
--orders us to liquidate; or
. there occurs any other event of default provided for in such series.
(Section 6.01)
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law. (Section 6.01)
A default under the indenture means any event which is, or after notice or
passage of time would be, an event of default under the indenture. A default
under the fourth bullet point above is not an event of default until the
Trustee or the holders of at least 25% in principal amount of the series notify
us of the default and we do not cure the default within the time specified
after receipt of the notice. (Section 6.01)
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If an event of default occurs under the indenture and is continuing on a
series, the trustee by notice to us, or (except as provided in the next
sentence) the holders of at least 25% in principal amount of the series by
notice both to us and to the trustee, may declare the principal of and accrued
interest on all the debt securities of the series to be due and payable
immediately. In the case of a series issued to a WEC Trust, if, upon an event
of default, the trustee or the holders of not less than 25% in aggregate
principal amount of the series fail to declare the principal of all the debt
securities of that series to be immediately due and payable, then the holders
of 25% in aggregate liquidation amount of the preferred securities then
outstanding shall have the right to do so by notice to us and to the trustee.
Discounted debt securities may provide that the amount of principal due upon
acceleration is less than the stated principal amount.
Except as provided in the next sentence, the holders of a majority in
principal amount of a series of debt securities, by notice to the trustee, may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing events of default on
the series have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration. In the case of a series
of debt securities issued to a WEC Trust, the holders of a majority in
aggregate liquidation amount of the preferred securities then outstanding shall
also have the right to rescind the acceleration and its consequences with
respect to such series, subject to the same conditions set forth above.
(Section 6.02)
If an event of default occurs and is continuing on a series, the trustee may
pursue any available remedy to collect principal or interest then due on the
series, to enforce the performance of any provision applicable to the series,
or otherwise to protect the rights of the trustee and holders of the series.
(Section 6.03)
In the case of a series issued to a WEC Trust, any holder of the related
preferred securities of the WEC Trust shall have the right, upon the occurrence
and continuance of an event of default with respect to the series following our
failure to pay timely interest, principal or premium as described above, to sue
us directly. In that lawsuit the holder of the related preferred securities can
force us to pay to the holder the principal of, and premium, if any, and
interest on, the debt securities having a principal amount equal to the
aggregate liquidation amount of the preferred securities held by that holder.
(Section 6.06)
The trustee may require indemnity satisfactory to it before it performs any
duty or exercises any right or power under the indenture or the debt securities
which it reasonably believes may expose it to any loss, liability or expense.
(Section 7.01) With some limitations, holders of a majority in principal amount
of the debt securities of the series may direct the trustee in its exercise of
any trust or power with respect to that series. (Section 6.05) Except in the
case of default in payment on a series, the trustee may withhold notice of any
continuing default if it determines that withholding the notice is in the
interest of holders of the series. (Section 7.04) We are required to furnish
the trustee annually a brief certificate as to our compliance with all
conditions and covenants under the indenture. (Section 4.04)
The indenture does not have a cross-default provision. Thus, a default by us
on any other debt, including any other series of debt securities, would not
constitute an event of default under the indenture. A securities resolution may
provide for a cross-default provision; in that case the prospectus supplement
will describe the terms of that provision.
Amendments and Waivers
The indenture and the debt securities or any coupons of the series may be
amended, and any default may be waived. Unless the securities resolution
provides otherwise, in which event the prospectus supplement will describe the
revised provision, we and the trustee may amend the debt securities, the
indenture and any coupons with the written consent of the holders of a majority
in principal amount of the debt securities of all series affected voting as one
class. However, in the case of a series of debt securities issued to a WEC
Trust, we are not permitted to adopt an amendment that adversely affects the
holders of the preferred securities in any material respect, and no termination
of the indenture shall occur, without the prior consent of the holders of not
less than a majority in aggregate liquidation amount of the preferred
securities then outstanding unless and until
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the principal (and premium, if any) of the debt securities of that series and
all accrued and unpaid interest thereon have been paid in full. Furthermore, in
the case of a series issued to a WEC Trust, no amendment can be made to the
provisions of the indenture allowing holders of preferred securities to sue
directly following our failure to make timely payments on the debt securities
as described above without the prior consent of the holder of each preferred
security then outstanding unless and until the principal (and premium, if any)
of the debt securities of the series and all accrued and unpaid interest
thereon have been paid in full. (Section 10.02)
Without the consent of each debt security holder affected, no amendment or
waiver may :
. reduce the principal amount of debt securities whose holders must
consent to an amendment or waiver;
. reduce the interest on or change the time for payment of interest on any
debt security (but this does not affect our right to elect to defer one
or more payments of interest as described below under "Certain
Provisions Relating to Junior Subordinated Debentures Issued to the WEC
Trusts--Option to Extend Interest Payment Date");
. change the fixed maturity of any debt security (subject to any right we
may have retained in the securities resolution and described in the
prospectus supplement);
. reduce the principal of any non-discounted debt security or reduce the
amount of the principal of any discounted debt security that would be
due on acceleration thereof;
. change the currency in which the principal or interest on a debt
security is payable;
. make any change that materially adversely affects the right to convert
or exchange any debt security; or
. waive any default in payment of interest on or principal of a debt
security. (Section 10.02)
Without the consent of any debt security holder, we may amend the indenture
or the debt securities:
. to cure any ambiguity, omission, defect, or inconsistency;
. to provide for the assumption of our obligations to debt security
holders by the surviving company in the event of a merger or
consolidation requiring such assumption;
. to provide that specific provisions of the indenture shall not apply to
a series of debt securities not previously issued;
. to create a series of debt securities and establish its terms;
. to provide for a separate trustee for one or more series of debt
securities; or
. to make any change that does not materially adversely affect the rights
of any debt security holder. (Section 10.01)
Legal Defeasance and Covenant Defeasance
Debt securities of a series may be defeased at any time in accordance with
their terms and as set forth in the indenture and described briefly below,
unless the securities resolution establishing the terms of the series otherwise
provides. Any defeasance may terminate all of our obligations (with limited
exceptions) with respect to a series of debt securities and the indenture
("legal defeasance"), or it may terminate only our obligations under any
restrictive covenants which may be applicable to a particular series ("covenant
defeasance").
We may exercise our legal defeasance option even though we have also
exercised our covenant defeasance option. If we exercise our legal defeasance
option, that series of debt securities may not be accelerated because of an
event of default. If we exercise our covenant defeasance option, that series of
debt securities may not be accelerated by reference to any restrictive
covenants which may be applicable to that particular series. (Section 8.01)
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To exercise either defeasance option as to a series of debt securities, we
must:
. irrevocably deposit in trust (the "defeasance trust") with the trustee
or another trustee money or U.S. government obligations;
. deliver a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due on the deposited U.S. government obligations, without
reinvestment, plus any deposited money without investment, will provide
cash at the times and in the amounts necessary to pay the principal and
interest when due on all debt securities of the series to maturity or
redemption, as the case may be; and
. comply with certain other conditions. In particular, we must obtain an
opinion of tax counsel that the defeasance will not result in
recognition of any gain or loss to holders for federal income tax
purposes.
U.S. government obligations are direct obligations of (a) the United States or
(b) an agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed by the United States, which, in either case (a) or
(b), have the full faith and credit of the United States of America pledged for
payment and which are not callable at the issuer's option. It also includes
certificates representing an ownership interest in such obligations. (Section
8.02)
Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC
Trusts
General. The junior subordinated debentures that we issue to a WEC Trust may
be issued in one or more series under the indenture with terms corresponding to
the terms of a series of preferred securities issued by that WEC Trust.
Concurrently with the issuance of each WEC Trust's preferred securities, the
WEC Trust will invest the proceeds from the sale of the preferred securities
and the consideration we pay for the common securities in a series of
corresponding junior subordinated debentures that we will issue to the WEC
Trust.
Each series of corresponding junior subordinated debentures:
. will be unsecured;
. will be in the principal amount equal to the aggregate stated
liquidation amount of the preferred securities and the common securities
of the WEC Trust; and
. will rank equally with all other series of junior subordinated debt
securities in terms of priority of payment.
Unless provided otherwise in the prospectus supplement, holders of the
preferred securities issued by a WEC Trust that owns a series of corresponding
junior subordinated debentures will have the rights summarized above in
connection with modifications to the indenture or upon occurrence of a trust
event of default. See "Amendments and Waivers" and "Defaults and Remedies,"
above and "RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEES--Enforcement Rights of
Holders of Preferred Securities."
The prospectus supplement will describe specific terms relating to the
offering of the corresponding junior subordinated debentures. See "DESCRIPTION
OF DEBT SECURITIES--Terms."
Unless otherwise specified in the applicable prospectus supplement, we will
covenant, as to each series of corresponding junior subordinated debentures:
. to maintain, directly or indirectly, 100% ownership of the common
securities of the WEC Trust to which the corresponding junior
subordinated debentures have been issued (provided that certain
successors which are permitted pursuant to the indenture may succeed to
our ownership of the common securities);
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. not to voluntarily dissolve, wind-up or liquidate any WEC Trust, except:
--in connection with a distribution of the junior subordinated
debentures to the holders of the preferred securities in liquidation
of the WEC Trust; or
--in connection with certain mergers, consolidations or amalgamations
permitted by the related trust agreement; and
. to use our reasonable efforts, consistent with the terms and provisions
of the related trust agreement, to cause such WEC Trust to remain
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes.
For additional covenants relating to payment of expenses of the WEC Trusts, see
"DESCRIPTION OF PREFERRED SECURITIES--Payment of Expenses."
Option to Extend Interest Payment Date. Unless otherwise stated in the
applicable prospectus supplement, we will have the right at any time and from
time to time during the term of any series of corresponding junior subordinated
debentures to defer payments of interest for a specified number of consecutive
interest payment, or extension, periods. No extension period may extend beyond
the maturity date of that series of corresponding junior subordinated
debentures. We may pay at any time all or any portion of the interest accrued
to that point during a deferral period. At the end of the deferral period or at
a redemption date, we will be obligated to pay all interest accrued and unpaid
(together with interest on the unpaid interest to the extent permitted by
applicable law.) United States federal income tax consequences and special
considerations applicable to any corresponding junior subordinated debentures
for which an extension period has been elected will be described in the
applicable prospectus supplement. During any extension period, or while we are
in default, we will be restricted in our ability to make payments or incur
obligations related to our capital stock or debt securities ranking equal to or
below the junior subordinated debentures.
Prior to the termination of any extension period, we may further extend the
interest payment period. However, the deferral period, together with all prior
and further extensions, may not exceed 20 consecutive quarters or extend beyond
the maturity date of the junior subordinated debentures. After the termination
of any deferral period and the payment of all amounts due, we may decide to
begin a new deferral period, subject to the above requirements.
If the property trustee is the sole holder of the series of junior
subordinated debentures held by the WEC Trust, we will give the administrative
trustee and the property trustee notice of our selection of any deferral period
one business day prior to the earlier of:
. the next date distributions on the preferred securities are payable; or
. the date the WEC Trust is required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to
holders of the preferred securities of the record date or the date any
distribution is payable.
If the property trustee is not the sole holder of the series of junior
subordinated debentures, we will give the debenture holders notice of our
selection of any deferral period ten business days prior to the earliest of:
. the next interest payment date; or
. the date upon which we are required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to
holders of the junior subordinated debentures of the record or payment
date of any related interest payment.
Redemption. The junior subordinated debentures and the applicable securities
resolution will provide the terms upon which we can redeem the junior
subordinated debentures at our option, and will specify a date prior to which
we will not be allowed to redeem the junior subordinated debentures, and after
which we will have the right to redeem the junior subordinated debentures, in
whole or in part, upon not less than 30 days nor more than 60 days notice to
the holder of the junior subordinated debentures at a redemption price or
prices stated in the applicable prospectus supplement.
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If the junior subordinated debentures are redeemed only in part, they will
be redeemed pro rata or by lot or by any other method selected by the trustee.
If a partial redemption of the corresponding junior subordinated debentures
would result in delisting of the preferred securities issued by the WEC Trust
from any national securities exchange or other self-regulatory organization on
which the preferred securities are then listed, we will not be permitted to
effect a partial redemption and may only redeem the corresponding junior
subordinated debentures as a whole.
Except as otherwise specified in the applicable prospectus supplement and
subject to the provisions of the applicable securities resolution, if a Tax
Event (as defined below) or an Investment Company Event (as defined below) in
respect of a WEC Trust occurs and is continuing, we have the option to redeem
the corresponding junior subordinated debentures held by the WEC Trust, in
whole but not in part, at any time within 90 days thereafter. If the applicable
WEC Trust is the holder of all outstanding corresponding junior subordinated
debentures, the proceeds of the redemption will be used by the WEC Trust to
redeem the corresponding preferred securities and common securities in
accordance with their terms.
"Tax Event" means that the applicable WEC Trust will have received an
opinion of counsel (which may be counsel to us or an affiliate) experienced in
such matters to the effect that, as a result of any
. amendment to, or change (including any announced proposed change) in,
the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority, or
. official administrative written decision, pronouncement or action or
judicial decision interpreting or applying such laws or regulations,
in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the applicable series of junior subordinated debentures pursuant to the
applicable securities resolution, there is more than an insubstantial risk
that:
. the WEC Trust is, or will be within 90 days of the date of the opinion
of counsel, subject to United States Federal income tax with respect to
income received or accrued on the junior subordinated debentures;
. interest we pay on the corresponding junior subordinated debentures is
not, or will not be within 90 days of the date of the opinion of
counsel, deductible, in whole or in part, for United States Federal
income tax purposes; or
. the WEC Trust is, or will be within 90 days of the date of the opinion
of counsel, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Investment Company Event" means that the applicable WEC Trust will have
received an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority on or after the date of
original issuance of the preferred securities by the WEC Trust, the WEC Trust
is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended.
Restrictions on Certain Payments. Unless otherwise provided in the
applicable prospectus supplement, we will promise, as to each series of junior
subordinated debentures issued to a WEC Trust, that we and our subsidiaries
will not:
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital stock, or
. make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including other junior
subordinated debentures) that rank equally with or junior in interest to
the junior subordinated debentures, or
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. make any guarantee payments with respect to any of the debt securities
of any of our subsidiaries if the guarantee ranks equally with or junior
in interest to the junior subordinated debentures
other than:
. dividends or distributions payable in our common stock;
. redemptions or purchases of any rights pursuant to our shareholder
rights plan, if any, or any successor rights agreement, and the
declaration of a dividend of rights or the issuance of stock under a
rights agreement in the future;
. payments under any guarantee relating to the preferred securities of a
WEC Trust;
. purchases of common stock related to the issuance of common stock under
any benefit plans for our directors, officers or employees;
. obligations under any dividend reinvestment plan or stock purchase plan;
and
. purchases of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of a security being
converted or exchanged for our capital stock.
These restriction apply only if:
. at that time we have actual knowledge that an event has occurred that
(a) with the giving of notice or the lapse of time, or both, would
constitute an event of default under the indenture with respect to the
junior subordinated debentures of that series and (b) we shall not have
taken reasonable steps to cure the event, or
. the corresponding junior subordinated debentures are held by a WEC Trust
which is the issuer of a series of related preferred securities, and we
are in default with respect to payment of any obligations under the
guarantee relating to those preferred securities, or
. we shall have given notice of our selection of a deferral of interest
extension period as provided pursuant to the securities resolution with
respect to the corresponding junior subordinated debentures and shall
not have rescinded the notice, or the extension period shall be
continuing.
Regarding the Trustee
The First National Bank of Chicago will act as trustee and registrar for
debt securities issued under the indenture and, unless otherwise indicated in a
prospectus supplement, the trustee will also act as transfer agent and paying
agent with respect to the debt securities. (Section 2.03) We may remove the
trustee with or without cause if we notify the trustee three months in advance
and if no default occurs during the three-month period. (Section 7.07) The
trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for us or our affiliates, and may otherwise
deal with us or our affiliates, as if it were not the trustee.
The First National Bank of Chicago is a participating lender with respect to
our existing credit agreements for our commercial paper program ($15 million)
and is a lender and administrative agent for a $75 million credit arrangement
for Wisconsin Electric, one of our subsidiaries. One of our directors is also a
director of the bank and of the bank holding company.
DESCRIPTION OF PREFERRED SECURITIES
The following section describes the general terms and provisions of the
preferred securities to which any prospectus supplement may relate. The
particular terms of the preferred securities offered by any WEC Trust and the
extent to which any of these general provisions do not apply to its preferred
securities will be described in the prospectus supplement relating to that WEC
Trust and its preferred securities.
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Pursuant to the terms of the trust agreement for each WEC Trust, the
administrative trustees are authorized to issue the preferred securities and
the common securities on behalf of the WEC Trust. The preferred securities will
represent beneficial ownership interests in the assets of the WEC Trust. The
holders of the preferred securities will be entitled to a preference over
holders of the common securities of the WEC Trust in certain circumstances with
respect to distributions and amounts payable on redemption or liquidation.
Holders of preferred securities will also have certain other benefits as
described in the corresponding trust agreement.
We have summarized selected provisions of the preferred securities and each
trust agreement below. This summary is not complete. The form of trust
agreement has been filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the form of trust agreement for
provisions that may be important to you. You should also consider applicable
provisions of the Trust Indenture Act. Each of the WEC Trusts is a legally
separate entity, and the assets of one are not available to satisfy the
obligations of the other.
General
The preferred securities of a WEC Trust will rank equally, and payments on
the preferred securities will be made pro rata, with the common securities of
that WEC Trust except as described under "--Subordination of Common
Securities." Legal title to the corresponding junior subordinated debentures
will be held by the property trustee in trust for the benefit of the holders of
the related preferred securities and for us as holder of the common securities.
Each guarantee agreement we execute for the benefit of the holders of a WEC
Trust's preferred securities will be a guarantee on a junior subordinated basis
with respect to the related preferred securities but will not guarantee payment
of distributions or amounts payable on redemption or liquidation of the
preferred securities when the related WEC Trust does not have funds available
to make such payments. See "DESCRIPTION OF GUARANTEES."
Distributions
Distributions on the preferred securities will be cumulative, will
accumulate from the date of original issuance and will be payable on the dates
specified in the applicable prospectus supplement. Except as specified in the
applicable prospectus supplement, in the event that any date on which
distributions are payable on the preferred securities is not a business day,
payment of the distribution will be made on the next succeeding day that is a
business day (without any interest or other payment in respect to the delay),
with the same force and effect as if made on the originally specified date.
However, if the next business day is in the next calendar year, payment of
distributions will be made on the preceding business day. Each date on which
distributions are payable is referred to in this prospectus as a distribution
date.
A WEC Trust's preferred securities represent beneficial ownership interests
in the assets of that WEC Trust. The distributions on each preferred security
will be payable at a rate specified in the prospectus supplement for that
preferred security. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months unless
otherwise specified in the applicable prospectus supplement. Distributions to
which holders of preferred securities are entitled will accumulate additional
distributions at the rate per annum specified in the applicable prospectus
supplement. Distributions on preferred securities as used in this prospectus
includes any additional distributions unless otherwise stated.
The revenue of each WEC Trust available for distribution to holders of its
preferred securities will be limited to payments under the corresponding junior
subordinated debentures it owns. Each WEC Trust will invest the proceeds from
the issuance and sale of its trust securities in the corresponding junior
subordinated debentures, and it will have no other assets. See "DESCRIPTION OF
DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures
Issued to the WEC Trusts." If we do not make interest payments on the
corresponding junior subordinated debentures, the property trustee will not
have funds available to pay distributions on the related preferred securities.
We have guaranteed the payment of distributions (if and to the extent the WEC
Trust has funds legally available for the payment of distributions and cash
sufficient to make the payments) on a limited basis as set forth herein under
"DESCRIPTION OF GUARANTEES."
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Distributions on the preferred securities will be payable to the holders as
they appear on the register of the WEC Trust on the relevant record dates,
which, as long as the preferred securities remain in book-entry form, will be
one business day prior to the relevant distribution date. Subject to any
applicable laws and regulations and to the provisions of the applicable trust
agreement, each distribution payment will be made as described under "BOOK-
ENTRY ISSUANCE." In the event any preferred securities are not in book-entry
form, the relevant record date for such preferred securities shall be a date at
least 15 days prior to the relevant distribution date, as specified in the
applicable prospectus supplement.
Payment of Expenses
Pursuant to the indenture, we have agreed to pay all debts and obligations
(other than distributions on the trust securities) and all costs and expenses
of the WEC Trusts and to pay any and all taxes, duties, assessments or other
governmental charges (other than United States withholding taxes) imposed by
the United States or any other taxing authority. This includes, but is not
limited to, all costs and expenses relating to the organization of the WEC
Trusts, the fees and expenses of the property trustee, the Delaware trustee and
the administrative trustees and all costs and expenses relating to the
operation of the WEC Trusts. As a result, the net amounts received and retained
by a WEC Trust after paying these fees, expenses, debts and obligations will be
equal to the amounts the WEC Trust would have received and retained had no
fees, expenses, debts and obligations been incurred by or imposed on it. Our
promise to pay these obligations is for the benefit of, and shall be
enforceable by, any creditor to whom the fees, expenses, debts and obligations
are owed, whether or not the creditor has received notice of the promise. Any
creditor may enforce these obligations directly against us, and we have agreed
to irrevocably waive any right or remedy that would otherwise require that any
creditor take any action against the WEC Trust or any other person before
proceeding against us. We will execute such additional agreements as may be
necessary to give full effect to these promises.
Redemption or Exchange
If we repay or redeem, in whole or in part, any junior subordinated
debentures that have been issued to a WEC Trust, whether at maturity or
earlier, the proceeds from the repayment or redemption shall be applied by the
property trustee to redeem a like amount of the trust securities. The property
trustee will give not less than 30 nor more than 60 days notice, and the
redemption price will be equal to the sum of:
. the aggregate liquidation amount of the trust securities being redeemed;
plus
. accumulated but unpaid distributions on to the redeemed trust securities
to the date of redemption; plus
. the related amount of the premium, if any, that we pay upon the
concurrent redemption of corresponding junior subordinated debentures.
See "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior
Subordinated Debentures Issued to the WEC Trusts--Redemption."
If we are repaying or redeeming less than all of any series of junior
subordinated debentures on a redemption date, then the proceeds from the
repayment or redemption shall be allocated to redeem the related trust
securities pro rata. The amount of premium, if any, that we pay to redeem all
or any part of any series of any corresponding junior subordinated debentures
will also be allocated to the redemption pro rata of the related trust
securities.
We will have the right to redeem any series of junior subordinated
debentures:
. subject to the conditions described under "DESCRIPTION OF DEBT
SECURITIES--Certain Provisions Relating to Junior Subordinated
Debentures Issued to the WEC Trusts--Redemption"; or
. as may be otherwise specified in the applicable prospectus supplement.
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We have the right to dissolve a WEC Trust at any time and, after
satisfaction of any liabilities to creditors of the WEC Trust as provided by
applicable law, to cause the corresponding junior subordinated debentures owned
by the WEC Trust to be distributed to the holders of the related preferred
securities and common securities in liquidation of the WEC Trust.
If provided in the applicable prospectus supplement, we will have the right
to extend or shorten the maturity of any series of junior subordinated
debentures at the time that we exercise our right to elect to dissolve the
related WEC Trust and cause the corresponding junior subordinated debentures to
be distributed to the holders of the related preferred securities and common
securities in liquidation of the WEC Trust. However, we can extend the maturity
only if the conditions specified in the applicable prospectus supplement are
met at the time the election is made and at the time of the extension.
After the liquidation date fixed for any distribution of corresponding
junior subordinated debentures to the holders of any series of preferred
securities:
. that series of preferred securities will no longer be deemed to be
outstanding;
. The Depository Trust Company (DTC) or its nominee, as the record holder
of the preferred securities, will receive a registered global
certificate or certificates representing the corresponding junior
subordinated debentures to be delivered in the distribution; and
. any certificates representing that series of preferred securities not
held by DTC or its nominee will be deemed to represent the corresponding
junior subordinated debentures having a principal amount equal to the
stated liquidation amount of that series of preferred securities, and
bearing accrued and unpaid interest in an amount equal to the accrued
and unpaid distributions on that series of preferred securities until
the certificates are presented to the administrative trustees or their
agent for transfer or reissuance.
We cannot predict the market prices for the preferred securities or the
corresponding junior subordinated debentures that may be distributed in
exchange for preferred securities. As a result, the preferred securities that
an investor may purchase, or the corresponding junior subordinated debentures
that an investor may receive on dissolution and liquidation of a WEC Trust, may
trade at a lower price than the investor paid to purchase the preferred
securities.
Redemption and Exchange Procedures
Any preferred securities that are redeemed on any redemption date will
receive the redemption price from the contemporaneous redemption of the
corresponding junior subordinated debentures. Redemptions of the preferred
securities will be made and the redemption price will be payable on each
redemption date only to the extent that the related WEC Trust has funds on hand
available for the payment of such redemption price. See "Subordination of
Common Securities."
If a WEC Trust gives a notice of redemption in respect of its preferred
securities, then, by 12:00 noon, New York City time, on the redemption date, to
the extent funds are available, the property trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable redemption price and will give
DTC irrevocable instructions and authority to pay the redemption price to the
holders of such preferred securities. See "BOOK-ENTRY ISSUANCE." If the
preferred securities are no longer in book-entry form, the property trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for the preferred securities funds sufficient to pay the applicable redemption
price and will give the paying agent irrevocable instructions and authority to
pay the redemption price to the holders thereof upon surrender of their
certificates evidencing the preferred securities.
Nevertheless, distributions payable on or prior to the redemption date for
any preferred securities called for redemption shall be payable to the holders
of such preferred securities on the relevant record dates for the related
distribution dates. If notice of redemption shall have been given and funds
deposited as required, then
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upon the date of such deposit, all rights of the holders of the preferred
securities called for redemption will cease, except the right of the holders of
the preferred securities to receive the redemption price, but without interest
on the redemption price, and the preferred securities will cease to be
outstanding.
Except as specified in the applicable prospectus supplement, in the event
that any date fixed for redemption of preferred securities is not a business
day, then payment of the redemption price payable on such date will be made on
the next succeeding day which is a business day (and without any interest or
other payment in respect of any delay). However, if the next business day is in
the next calendar year, the redemption price will be payable on the preceding
business day. In the event that payment of the redemption price in respect of
preferred securities called for redemption is improperly withheld or refused
and not paid either by the WEC Trust or by us pursuant to the guarantee as
described under "DESCRIPTION OF GUARANTEES," then:
. distributions on those preferred securities will continue to accrue at
the then applicable rate, from the redemption date originally
established by the WEC Trust for those preferred securities to the date
the redemption price is actually paid; and
. the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
federal securities law), we or our subsidiaries may at any time and from time
to time purchase outstanding preferred securities by tender, in the open market
or by private agreement.
Payment of the redemption price on the preferred securities and any
distribution of corresponding junior subordinated debentures to holders of
preferred securities will be made to the applicable record holders thereof as
they appear on the register for the preferred securities on the relevant record
date. Except as provided in the next sentence, the record date will be one
business day prior to the relevant redemption date or liquidation date, as
applicable. However, if any preferred securities are not in book-entry form,
the relevant record date for those preferred securities shall be a date at
least 15 days prior to the redemption date or liquidation date, as applicable,
as specified in the applicable prospectus supplement.
If less than all of the preferred securities and common securities issued by
a WEC Trust are to be redeemed on a redemption date, then the aggregate
liquidation amount of preferred securities and common securities to be redeemed
shall be allocated pro rata to the preferred securities and the common
securities based upon the relative liquidation amounts of the two classes. The
particular preferred securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the redemption date by the property
trustee from the outstanding preferred securities not previously called for
redemption. The property trustee shall promptly notify the trust registrar in
writing of the preferred securities selected for redemption and, in the case of
any preferred securities selected for partial redemption, the liquidation
amount to be redeemed. For all purposes of each trust agreement, unless the
context otherwise requires, all provisions relating to the redemption of
preferred securities shall relate, in the case of any preferred securities
redeemed or to be redeemed only in part, to the portion of the aggregate
liquidation amount of preferred securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of trust securities to be
redeemed at the holder's registered address. Unless we default in payment of
the redemption price on the corresponding junior subordinated debentures, on
and after the redemption date interest ceases to accrue on the corresponding
junior subordinated debentures or portions thereof (and distributions cease to
accrue on the related preferred securities or portions thereof) called for
redemption.
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Subordination of Common Securities
Payment of distributions on, and the redemption price of, each WEC Trust's
preferred securities and common securities, as applicable, generally shall be
made pro rata based on the liquidation amount of the preferred securities and
of the common securities. However, if on any distribution date or redemption
date an event of default with respect to any corresponding junior subordinated
debenture shall have occurred and be continuing, then:
. neither we nor the WEC Trust shall pay any distribution on, or
redemption price of, any of the WEC Trust's common securities, and
neither we nor the WEC Trust shall make any other payment on account of
the redemption, liquidation or other acquisition of such common
securities, unless
--all accumulated and unpaid distributions on all of the WEC Trust's
outstanding preferred securities are paid in cash for all distribution
periods terminating on or prior to any payment on the common
securities, and
--in the case of a payment of the redemption price, the full amount of
the redemption price on all of the WEC Trust's outstanding preferred
securities then called for redemption shall have been paid or provided
for; and
. all funds available to the property trustee shall first be applied to
the payment in full in cash of all distributions on, or redemption price
of, the WEC Trust's preferred securities then due and payable.
In the case of any event of default with respect to any corresponding junior
subordinated debentures, we (as holder of the WEC Trust's common securities)
will be deemed to have waived any right to act with respect to the event of
default under the applicable trust agreement until the effect of all events of
default with respect to such preferred securities has been cured, waived or
otherwise eliminated. Until any events of default under the applicable trust
agreement with respect to the preferred securities have been cured, waived or
otherwise eliminated, the property trustee is required to act solely on behalf
of the holders of the preferred securities and not on our behalf as holder of
the WEC Trust's common securities, and only the holders of such preferred
securities will have the right to direct the property trustee to act on their
behalf.
Liquidation Distribution upon Dissolution
Pursuant to each trust agreement, each WEC Trust shall automatically
dissolve upon expiration of its term and shall dissolve on the first to occur
of:
. specified events relating to our bankruptcy, dissolution or liquidation;
. our written direction to the property trustee, as depositor, to dissolve
the WEC Trust and distribute the corresponding junior subordinated
debentures to the holders of the preferred securities in exchange for
the preferred securities (which direction is optional and wholly within
our discretion as depositor);
. the redemption of all of the WEC Trust's trust securities; and
. the entry of an order for the dissolution of the WEC Trust by a court of
competent jurisdiction.
If an early dissolution occurs in any manner except by the redemption of all
of the trust securities, then the WEC Trust will be liquidated by the issuer
trustees as expeditiously as the issuer trustees determine to be possible.
Except as provided in the next sentence, the issuer trustees shall distribute
(after satisfaction of any liabilities to creditors of such WEC Trust as
provided by applicable law) to the holders of such trust securities a like
amount of the corresponding junior subordinated debentures. However, if such a
distribution is determined by the property trustee not to be practical, the
holders of the trust securities will be entitled to receive out of the assets
of the WEC Trust available for distribution to holders (after satisfaction of
any liabilities to creditors of the WEC Trust as provided by applicable law) a
liquidation distribution in an amount equal to, in the case of holders of
preferred securities, the aggregate of the liquidation amount plus accrued and
unpaid distributions
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thereon to the date of payment. If the liquidation distribution can be paid
only in part because the WEC Trust has insufficient assets available to pay in
full the aggregate liquidation distribution, then the amounts payable directly
by the WEC Trust on its preferred securities will be paid on a pro rata basis.
As the holder of the WEC Trust's common securities, we will be entitled to
receive distributions upon any liquidation pro rata with the holders of its
preferred securities. However, if an event of default relating to the
corresponding junior subordinated debentures has occurred and is continuing,
the preferred securities will have a priority over the common securities.
Events of Default; Notice
Any one of the following events constitutes a trust "event of default" under
each trust agreement with respect to the preferred securities issued thereunder
(whatever the reason for the trust event of default):
. the occurrence of an event of default with respect to a corresponding
series of junior subordinated debentures issued under the indenture to
the trust (see "DESCRIPTION OF DEBT SECURITIES--Defaults and Remedies");
or
. default by the property trustee in the payment of any distribution when
it becomes due and payable, and continuation of the default for a period
of 60 days; or
. default by the property trustee in the payment of any redemption price
of any trust security when it becomes due and payable; or
. default in the performance, or breach, in any material respect, of any
covenant or warranty of the issuer trustees in the trust agreement
(other than a default in the payment of any distribution or any
redemption price as provided above), and continuation of that default or
breach for a period of 90 days after there has been given, by registered
or certified mail, to the defaulting issuer trustee or trustees by the
holders of at least 25% in aggregate liquidation preference of the
outstanding preferred securities of the applicable WEC Trust, a written
notice specifying the default or breach and requiring it to be remedied
and stating that the notice is a "notice of default" under the trust
agreement; or
. the occurrence of specified events of bankruptcy or insolvency with
respect to the property trustee and our failure to appoint a successor
property trustee within 60 days.
Within 90 days after the occurrence of any trust event of default actually
known to the property trustee, the property trustee is required to transmit
notice of the trust event of default to the holders of the WEC Trust's
preferred securities, to the administrative trustees and to us, as depositor,
unless the trust event of default shall have been cured or waived. We and the
administrative trustees are required to file annually with the property trustee
a certificate as to whether or not we each are in compliance with all the
conditions and covenants applicable to us under each trust agreement.
If an event of default with respect to a corresponding junior subordinated
debenture has occurred and is continuing, the preferred securities shall have a
preference over the common securities upon termination of the WEC Trust as
described above. See "Liquidation Distribution upon Dissolution." The existence
of a trust event of default does not entitle the holders of preferred
securities to cause the redemption of the preferred securities.
Removal of Issuer Trustees
We as the holder of the common securities may remove an administrative
trustee at any time. Unless an event of default with respect to a corresponding
junior subordinated debenture shall have occurred and be continuing, we as the
holder of the common securities may also remove the property trustee or the
Delaware trustee at any time. If a trust event of default resulting from an
event of default with respect to a corresponding junior subordinated debenture
has occurred and is continuing, the property trustee and the Delaware trustee
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may be removed at such time by the holders of a majority in liquidation amount
of the outstanding preferred securities. In no event will the holders of the
preferred securities have the right to vote to appoint, remove or replace the
administrative trustees: that right belongs exclusively to us as the holder of
the common securities. No resignation or removal of an issuer trustee and no
appointment of a successor trustee will be effective until the successor
trustee accepts its appointment in accordance with the provisions of the
applicable trust agreement.
Co-trustees and Separate Property Trustee
Unless a trust event of default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the trust
property may at the time be located, we (as the holder of the common
securities) and the administrative trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the property trustee,
of all or any part of the trust property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable trust agreement. In case an event
of default with respect to a corresponding junior subordinated debenture has
occurred and is continuing, the property trustee alone will have power to make
such an appointment.
Merger or Consolidation of Issuer Trustees
Any corporation into which the property trustee, the Delaware trustee or any
administrative trustee that is not a natural person 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 trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such trustee, shall be the successor of such trustee under each
trust agreement, provided such corporation shall be otherwise qualified and
eligible.
Mergers, Consolidations, Conversions, Amalgamations or Replacements of the WEC
Trusts
A WEC Trust may not merge with or into, consolidate, convert into,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other person, except
as described below, as described in "Liquidation Distribution upon Dissolution"
or as described in the prospectus supplement with respect to the preferred
securities. A WEC Trust may, at our request, with the consent of the
administrative trustees and without the consent of the property trustee, the
Delaware trustee or the holders of the preferred securities, merge with or
into, consolidate, convert into, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any state; provided, that:
. the successor entity either (a) expressly assumes all of the obligations
of the WEC Trust with respect to the preferred securities or (b)
substitutes for the preferred securities other successor securities
having substantially the same terms as the preferred securities so long
as the successor securities rank the same as the preferred securities
rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise;
. we expressly appoint a trustee of such successor entity possessing the
same powers and duties as the property trustee as the holder of the
corresponding junior subordinated debentures;
. the successor securities are listed, or any successor securities will be
listed upon notification of issuance, on any national securities
exchange or other organization on which the preferred securities are
then listed, if any;
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. the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not cause the preferred securities
(including any successor securities) to be downgraded by a nationally
recognized statistical rating organization;
. the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities
(including any successor securities) in any material respect;
. the successor entity has a purpose substantially similar to that of the
WEC Trust;
. prior to the merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, we have received an opinion
from independent counsel to the WEC Trust experienced in such matters to
the effect that
--the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities
(including any successor securities) in any material respect, and
--following the merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, neither the WEC Trust nor
such successor entity will be required to register as an investment
company under the Investment Company Act; and
. we or any permitted successor or assignee owns all of the common
securities of the successor entity and guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the guarantee.
Notwithstanding the general provisions described above, a WEC Trust shall not,
except with the consent of holders of 100% in liquidation amount of the
preferred securities, merge with or into, consolidate, convert into,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
merger, consolidation, conversion, amalgamation, replacement, conveyance,
transfer or lease would cause the WEC Trust or the successor entity to be
classified as other than a grantor trust for United States federal income tax
purposes.
Voting Rights; Amendment of Each Trust Agreement
The holders of the preferred securities will have only the voting rights
described below and under "DESCRIPTION OF GUARANTEES--Amendments and
Assignment," plus any voting rights required by law.
Each trust agreement may be amended from time to time by us, the property
trustee and the administrative trustees, without the consent of the holders of
the preferred securities:
. to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
address matters or questions arising under the trust agreement in a way
which is consistent with the other provisions of the trust agreement; or
. to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the WEC Trust will be classified for United
States federal income tax purposes as a grantor trust or to ensure that
the WEC Trust will not be required to register as an "investment
company" under the Investment Company Act.
However, in the case of the first clause, the action must not adversely affect
in any material respect the interests of any holder of trust securities. Any
amendment of the trust agreement becomes effective when we give notice of the
amendment to the holders of the trust securities.
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Each trust agreement may be amended by us and the issuer trustees with:
. the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding trust securities; and
. receipt by the issuer trustees of an opinion of counsel experienced in
such matters to the effect that the amendment or the exercise of any
power granted to the issuer trustees in accordance with the amendment
will not affect the WEC Trust's status as a grantor trust for United
States federal income tax purposes or the WEC Trust's exemption from
status as an "investment company" under the Investment Company Act.
However, without the consent of each holder of trust securities, no amendment
may:
. change the amount or timing of any distribution on the trust securities
or otherwise adversely affect the amount of any distribution required to
be made in respect of the trust securities as of a specified date; or
. restrict the right of a holder of trust securities to sue for the
enforcement of any distribution payment.
The property trustee is required to notify each holder of preferred
securities whenever the property trustee is notified of a default with respect
to the corresponding junior subordinated debentures. Furthermore, so long as
any junior subordinated debentures are held by the property trustee, the issuer
trustees are not permitted to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture, or execute any
trust or power conferred on the property trustee with respect to the
corresponding junior subordinated debentures;
. waive any past default that is waivable under the indenture governing
the junior subordinated debentures;
. exercise any right to rescind or annul a declaration that the principal
of all the corresponding junior subordinated debentures shall be due and
payable; or
. give a required consent to any amendment, modification or termination of
the indenture, the applicable securities resolution or the corresponding
junior subordinated debentures
unless, in each case, they first obtain the approval of the holders of a
majority in aggregate liquidation amount of all outstanding preferred
securities. However, where the indenture requires the consent of each affected
holder of corresponding junior subordinated debentures, the property trustee
cannot give the consent without first obtaining the consent of each holder of
the related preferred securities. The issuer trustees cannot revoke any action
previously authorized or approved by a vote of the holders of the preferred
securities except by subsequent vote of the holders of the preferred
securities.
In addition to obtaining approval of the holders of the preferred securities
as described above, the issuer trustees are required to obtain an opinion of
counsel to the effect that the proposed action will not cause the WEC Trust to
be classified as a corporation for United States federal income tax purposes.
Any required approval of holders of preferred securities may be given either
at a meeting of holders of preferred securities or pursuant to a written
consent. The property trustee must notify record holders of preferred
securities of any meeting in the manner set forth in each trust agreement.
No vote or consent of the holders of preferred securities will be required
for a WEC Trust to redeem and cancel its preferred securities in accordance
with the applicable trust agreement.
Whenever holders of preferred securities are entitled to vote or consent
under any of the circumstances described above, neither we nor the issuer
trustees will be permitted to vote. For purposes of any vote or consent, any of
the preferred securities that we own (or that are owned by the issuer trustees
or our affiliates) will be treated as if they were not outstanding.
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Payment and Paying Agency
The depositary for the preferred securities will make payments in respect of
the preferred securities by crediting the relevant accounts at the depositary
on the applicable distribution dates. If any WEC Trust's preferred securities
are not held by the depositary, then the paying agent will mail checks to
registered holders of the preferred securities as their addresses appear on its
Register. Unless otherwise specified in the applicable prospectus supplement,
the paying agent shall initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to the administrative
trustees and to us. The paying agent can resign upon 30 days' written notice to
the property trustee and to us. If the property trustee resigns as paying
agent, the administrative trustees will appoint a bank or trust company
acceptable to the administrative trustees and to us to act as paying agent.
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the preferred
securities.
Each WEC Trust will register transfers of preferred securities without
charge, but will require payment of any tax or other governmental charges that
may be imposed in connection with any transfer or exchange. The WEC Trusts will
not register transfers of their preferred securities after the relevant
preferred securities are called for redemption.
Information Concerning the Property Trustee
The property trustee undertakes to perform only the duties that are
specifically set forth in each trust agreement, other than during the
continuance of a trust event of default. After a trust event of default, the
property trustee is required to exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the property trustee has no obligation to exercise
any of its powers under the applicable trust agreement at the request of any
holder of preferred securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that it might incur by doing so. If
no trust event of default has occurred and is continuing and the property
trustee is required to decide between alternative courses of action, construe
ambiguous provisions in the applicable trust agreement or is unsure of the
application of any provision of the applicable trust agreement, then we will
have the right to tell the property trustee which action to take unless the
matter is one on which holders of preferred securities are entitled to vote. If
we don't give any directions, the property trustee will take whatever action it
deems advisable and in the best interests of the holders of the trust
securities. The property trustee will have no liability except for its own bad
faith, negligence or willful misconduct.
Miscellaneous
The administrative trustees are authorized and directed to operate the WEC
Trusts in such a way that:
. no WEC Trust will be:
--deemed to be an "investment company" required to be registered under
the Investment Company Act; or
--classified as an association taxable as a corporation for United
States federal income tax purposes; and
. the corresponding junior subordinated debentures will be treated as our
indebtedness for United States federal income tax purposes.
We and the administrative trustees are authorized to take any lawful action
(consistent with the certificate of trust of each WEC Trust and each trust
agreement) that we and the administrative trustees determine in our discretion
to be necessary or desirable for these purposes, as long as the action does not
materially and adversely affect the interests of the holders of the related
preferred securities.
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Holders of the preferred securities have no preemptive or similar rights.
Neither WEC Trust may borrow money or issue debt or mortgage or pledge any
of its assets.
DESCRIPTION OF GUARANTEES
When the trust securities are issued, we will execute and deliver a
guarantee agreement for the benefit of the holders of the preferred securities.
The guarantee agreement will be qualified as an indenture under the Trust
Indenture Act. The First National Bank of Chicago will act as guarantee trustee
under each guarantee for the purposes of compliance with the Trust Indenture
Act, and will hold the guarantee for the benefit of the holders of the related
WEC Trust's preferred securities.
We have summarized certain provisions of the guarantees below. This summary
is not complete. The form of the guarantee agreement has been filed as an
exhibit to the registration statement of which this prospectus forms a part,
and you should read the guarantee agreement for provisions that may be
important to you. Reference in this summary to preferred securities means that
WEC Trust's preferred securities to which a guarantee relates.
General
We will promise to pay the guarantee payments to the holders of the
preferred securities, as and when due, regardless of any defense, right of set-
off or counterclaim that the WEC Trust may have or assert other than the
defense of payment. The guarantee payments will rank equal to the corresponding
junior subordinated debentures and will be junior and subordinated to our
senior debt and subordinated debt. The guarantee payments include the
following, to the extent not paid by or on behalf of the related WEC Trust:
. any accumulated and unpaid distributions required to be paid on the
preferred securities, but only if and to the extent that the applicable
WEC Trust has funds on hand available for the distributions at that
time;
. the redemption price with respect to any preferred securities called for
redemption, if and to the extent that the applicable WEC Trust has funds
on hand available to pay the redemption price at that time; or
. upon a voluntary or involuntary dissolution, winding up or liquidation
of a WEC Trust (unless the corresponding junior subordinated debentures
are distributed to the holders of the preferred securities), the lesser
of:
--the liquidation distribution; and
--the amount of assets of the applicable WEC Trust remaining available
for distribution to holders of preferred securities.
Our obligation to make a guarantee payment may be satisfied either by our
direct payment of the required amounts to the holders of the applicable
preferred securities or by causing the WEC Trust to pay them.
Each guarantee will be an irrevocable guarantee on a junior subordinated
basis of the related WEC Trust's obligations under the preferred securities,
but will apply only to the extent that the related WEC Trust has funds
sufficient to make the required payments. The guarantee is a guarantee of
payment, not a guarantee of collection.
If we do not make interest payments on the corresponding junior subordinated
debentures held by a WEC Trust, the WEC Trust will not be able to pay
distributions on the preferred securities. Each guarantee will rank subordinate
and junior in right of payment to all of our senior indebtedness and
subordinated indebtedness. See "Status of the Guarantees." Also, all of our
consolidated operating assets are owned by our subsidiaries, and most are owned
by regulated utilities. Various financing arrangements and regulatory
requirements impose
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restrictions on the ability of our utility subsidiaries to transfer funds to us
in the form of cash dividends, loans or advances. Under Wisconsin law,
Wisconsin Electric is prohibited from loaning funds, either directly or
indirectly, to us. We rely on funds obtained from our subsidiaries to meet our
obligations for payment of principal and interest on our outstanding debt
obligations and corporate expenses. Accordingly, our obligations under the
guarantees will be effectively subordinated to all existing and future
liabilities of our subsidiaries and could be affected by regulatory
limitations. See "DESCRIPTION OF DEBT SECURITIES--General" and "Ranking of Debt
Securities." Except as otherwise provided in the applicable prospectus
supplement, we and our subsidiaries are not limited in the amount of secured or
unsecured debt that we may have outstanding. See the prospectus supplement
relating to any offering of preferred securities.
We have also agreed to guarantee the obligations of the WEC Trusts with
respect to the common securities to the same extent as the guarantee to holders
of the preferred securities. However, if there is an event of default with
respect to a corresponding junior subordinated debenture, holders of preferred
securities will have priority over holders of common securities.
Our obligations described herein and in any accompanying prospectus
supplement, through the applicable guarantee agreement, the applicable trust
agreement, the corresponding junior subordinated debentures, and the applicable
securities resolution under the indenture, taken together, constitute our full,
irrevocable and unconditional guarantee of payments due on the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes the guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the WEC Trust's obligations under
the preferred securities. See "THE WEC TRUSTS," "DESCRIPTION OF PREFERRED
SECURITIES," and "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating
to Junior Subordinated Debentures Issued to the WEC Trusts."
Status of the Guarantees
Each guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our senior debt and
subordinated debt.
Each guarantee will rank equally with all other guarantees we issue relating
to preferred securities issued by the WEC Trusts. Each guarantee will
constitute a guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against us as the guarantor to
enforce its rights under the guarantee without first suing anyone else). Each
guarantee will be held for the benefit of the holders of the related preferred
securities. Each guarantee will be discharged only by payment of the guarantee
payments in full (to the extent not paid by the WEC Trust) or by distribution
of the corresponding junior subordinated debentures to the holders of the
preferred securities. None of the guarantees places a limitation on the amount
of additional senior indebtedness or subordinated indebtedness that we may
incur. We expect from time to time to incur additional indebtedness
constituting senior indebtedness or subordinated indebtedness.
Amendments and Assignment
Except with respect to any changes which do not adversely affect the rights
of holders of the related preferred securities in any material respect (in
which case no vote will be required), no guarantee may be amended without the
prior approval of the holders of not less than a majority of the aggregate
liquidation amount of the related outstanding preferred securities. The manner
of obtaining any required approval will be as set forth under "DESCRIPTION OF
PREFERRED SECURITIES--Voting Rights; Amendment of Each Trust Agreement." All
guarantees and agreements contained in each guarantee agreement will bind our
successors, assigns, receivers, trustees and representatives and will benefit
the holders of the related preferred securities then outstanding.
Events of Default
We will be in default under any guarantee agreement if (a) we don't make
required payments or (b) we are notified that we haven't performed some other
obligation and have not cured that failure within 90 days.
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The holders of a majority in aggregate liquidation amount of the related
preferred securities have the right:
. to direct the time, method and place of conducting any proceeding for
any remedy available to the guarantee trustee in respect of the
guarantee agreement; or
. to direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement.
Holders of a majority in aggregate liquidation amount of the related preferred
securities also have the right to waive any past event of default and its
consequences.
Any holder of the preferred securities may institute a legal proceeding
directly against us to enforce the WEC Trust's rights under the guarantee
agreement without first instituting a legal proceeding against the WEC Trust,
the guarantee trustee or anyone else.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee agreement.
Information Concerning the Guarantee Trustee
The guarantee trustee promises to perform only the duties that are
specifically set forth in each guarantee agreement, other than during the
occurrence and continuance of a default by us in performance of any guarantee.
After we default and while the default continues, the guarantee trustee must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision, the
guarantee trustee is under no obligation to exercise any of the powers vested
in it by any guarantee agreement at the request of any holder of any preferred
securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that it might incur by doing so.
Termination of the Guarantees
Each guarantee will terminate upon full payment of the redemption price of
the related preferred securities, upon full payment of the amounts payable upon
liquidation of the related WEC Trust or upon distribution of corresponding
junior subordinated debentures to the holders of the related preferred
securities. Each guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the related preferred
securities must restore payment of any sums paid under the preferred securities
or the guarantee.
Governing Law
Each guarantee agreement will be governed by and construed in accordance
with the laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
Full and Unconditional Guarantee
We irrevocably guarantee payments of distributions and other amounts due on
the preferred securities (to the extent the applicable WEC Trust has funds
available for the payment of the distributions) as and to the extent set forth
under "DESCRIPTION OF GUARANTEES." Taken together, our obligations under each
series of corresponding junior subordinated debentures, the related securities
resolution, the indenture, the related trust agreement and the related
guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of preferred
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securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes the full guarantee. It is
only the combined operation of these documents that has the effect of providing
a full, irrevocable and unconditional guarantee of the WEC Trust's obligations
under the preferred securities.
If and to the extent that we do not make payments on any series of
corresponding junior subordinated debentures, the WEC Trust will not pay
distributions or other amounts due on its preferred securities. The guarantees
do not cover payment of distributions when the related WEC Trust does not have
sufficient funds to pay the distributions. In that event, the remedy for a
holder of a series of preferred securities is to institute a legal proceeding
directly against us for enforcement of payment of the distributions to such
holder. Our obligations under each guarantee are subordinate and junior in
right of payment to all of our senior indebtedness and subordinated
indebtedness.
Sufficiency of Payments
As long as all payments are made when due on each series of corresponding
junior subordinated debentures, those payments will be sufficient to cover
distributions and other payments due on the related preferred securities. This
is primarily because:
. the aggregate principal amount of each series of corresponding junior
subordinated debentures will be equal to the sum of the aggregate stated
liquidation amount of the related preferred securities and related
common securities;
. the interest rate and interest and other payment dates on each series of
corresponding junior subordinated debentures will match the distribution
rate and distribution and other payment dates for the related preferred
securities;
. we, as borrower, have promised to pay any and all costs, expenses and
liabilities of each WEC Trust except the WEC Trust's obligations under
its preferred securities; and
. each trust agreement provides that the WEC Trust will not engage in any
activity that is not consistent with the limited purposes of the WEC
Trust.
We have the right to set-off any payment we are otherwise required to make
under the indenture if and to the extent we have already made, or are
concurrently making, a payment under the related guarantee agreement.
Enforcement Rights of Holders of Preferred Securities
A holder of any preferred security may institute a legal proceeding directly
against us to enforce its rights under the related guarantee agreement without
first instituting a legal proceeding against the guarantee trustee, the related
WEC Trust or anyone else.
Our default or event of default under any other senior or subordinated
indebtedness would not necessarily constitute a trust event of default.
However, in the event of payment defaults under, or acceleration of, our senior
or subordinated indebtedness, the subordination provisions of the applicable
securities resolution will provide that no payments may be made in respect of
the corresponding junior subordinated debentures until the senior or
subordinated indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Our failure to make required payments on
any series of corresponding junior subordinated debentures would constitute a
trust event of default.
Limited Purpose of WEC Trusts
Each WEC Trust's preferred securities evidence undivided beneficial
ownership interests in the assets of that WEC Trust, and each WEC Trust exists
for the sole purposes of issuing its preferred securities and
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common securities, investing the proceeds in corresponding junior subordinated
debentures and engaging in only those other activities necessary, convenient or
incidental to those purposes. A principal difference between the rights of a
holder of a preferred security and a holder of a corresponding junior
subordinated debenture is that a holder of a junior subordinated debenture is
entitled to receive from us the principal amount of and interest accrued on
corresponding junior subordinated debentures held, while a holder of preferred
securities is entitled to receive distributions from the WEC Trust (or from us
under the applicable guarantee agreement) if and to the extent the WEC Trust
has funds available for the payment of the distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of any WEC Trust involving the
liquidation of the corresponding junior subordinated debentures, the holders of
the related preferred securities will be entitled to receive the liquidation
distribution in cash, out of assets of the WEC Trust (and after satisfaction of
creditors of the WEC Trust as provided by applicable law). See "DESCRIPTION OF
PREFERRED SECURITIES--Liquidation Distribution upon Dissolution." If we become
subject to any voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the corresponding junior subordinated debentures, would
be one of our junior subordinated creditors. The property trustee would be
subordinated in right of payment to all of our senior indebtedness and
subordinated indebtedness, but it would be entitled to receive payment in full
of principal and interest before our stockholders receive payments or
distributions. We are the guarantor under each guarantee agreement and pursuant
to the indenture, as borrower, have agreed to pay all costs, expenses and
liabilities of each WEC Trust (other than the WEC Trust's obligations to the
holders of its preferred securities). Accordingly, in the event of our
liquidation or bankruptcy the positions of a holder of preferred securities and
of a holder of corresponding junior subordinated debentures are expected to be
substantially the same relative to our other creditors and to our stockholders.
BOOK-ENTRY ISSUANCE
The debt securities, preferred securities and corresponding junior
subordinated debentures of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, the depositary identified in the prospectus supplement relating to that
series. The depositary will be DTC unless otherwise indicated in the applicable
prospectus supplement for a series. Book-entry securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged for the individual securities that it represents, a book-
entry security may not be transferred except as a whole to a nominee of the
depositary or to a successor depositary or any nominee of the successor.
DTC has advised us that DTC is a limited purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC holds securities that its participants deposit with DTC. DTC
also facilitates the settlement among participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with participants, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
Purchases of book-entry securities within the DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
securities on DTC's records. The ownership interest of each actual purchaser of
each book-entry security (Beneficial Owner) is in turn to be recorded on the
direct and
30
<PAGE>
indirect participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or indirect participants
through which the Beneficial Owners purchased book-entry securities. Transfers
of ownership interests in the book-entry securities are to be accomplished by
entries made on the books of participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in book-entry securities, except in the event that use of
the book-entry system is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global security.
To facilitate subsequent transfers, all book-entry securities deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of book-entry securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the book-entry securities; DTC's
records reflect only the identity of the direct participants to whose accounts
such book-entry securities are credited, which may or may not be the Beneficial
Owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.
We and the WEC Trusts expect that conveyance of notices and other
communications by DTC to direct participants, by direct participants to
indirect participants, and by direct participants and indirect participants to
Beneficial Owners and the voting rights of direct participants, indirect
participants and Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the book-entry securities.
Although voting with respect to the book-entry securities is limited to the
holders of record of the book-entry securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to book-entry securities. Under its usual procedures, DTC would mail an
omnibus proxy to the relevant trustee as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those direct participants to whose accounts such book-entry securities are
credited on the record date (identified in a listing attached to the omnibus
proxy).
As long as the book-entry securities are held by DTC or its nominee and DTC
continues to make its same-day funds settlement system available to us, all
payments on the book-entry securities (other than distribution payments on the
preferred securities or corresponding junior subordinated debentures) will be
made by us in immediately available funds to DTC. Distribution payments on the
preferred securities or the corresponding junior subordinated debentures will
be made by the relevant trustee to DTC. We and the WEC Trusts have been advised
that DTC's practice is to credit direct participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such participant and not of DTC, the relevant trustee, the
WEC Trust (as applicable) or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment on book-entry
securities to DTC is our responsibility or the responsibility of the relevant
trustee (as applicable), disbursement of such payments to direct participants
is the responsibility of DTC and disbursements of such payments to the
Beneficial Owners is the responsibility of direct and indirect participants.
Unless otherwise specified in the applicable prospectus supplement, if a
depositary for a series of preferred securities is at any time unwilling,
unable or ineligible to continue as depositary and we do not appoint a
successor depositary within 90 days, we will issue individual preferred
securities of such series in exchange for the global security representing that
series of preferred securities. In addition, we may at any time and in our sole
discretion, subject to any limitations described in the prospectus supplement
relating to the preferred
31
<PAGE>
securities, determine not to have any preferred securities of a series
represented by one or more global securities and, in that event, will issue
individual preferred securities of that series in exchange for the global
security or securities representing that series of preferred securities.
Further, if we so specify with respect to preferred securities of a series, an
owner of a beneficial interest in a global security representing preferred
securities of that series may, on terms acceptable to us, the property trustee
and the depositary for such global security, receive individual preferred
securities of that series in exchange for that owner's beneficial interests,
subject to any limitations described in the prospectus supplement relating to
those preferred securities. In that instance, a Beneficial Owner in the global
security will be entitled to physical delivery of individual preferred
securities of the series represented by the global security equal in
liquidation amount to such beneficial interest and to have such preferred
securities registered in its name. Individual preferred securities of the
series so issued will be issued in the denominations set forth in the related
prospectus supplement.
DTC may discontinue providing its services as securities depositary with
respect to debt securities at any time by giving reasonable notice to us or the
indenture trustee. Under those circumstances, if we do not appoint a successor
depositary within 90 days, we will issue individual definitive debt securities
in exchange for all the global securities representing the debt securities. In
addition, we may at any time and in our sole discretion determine not to have
the debt securities represented by global securities and, in that event, will
issue individual definitive debt securities in exchange for all the global
securities representing the debt securities. Individual definitive debt
securities so issued will be issued in denominations of $1,000 and any larger
amount that is an integral multiple of $1,000 and registered in such names as
DTC shall direct.
If the WEC Trust issues certificated preferred securities, they will be
registered in the name of the security holder. The preferred securities may be
transferred or exchanged, based on administrative procedures in the trust
agreement, without the payment of any service charge (other than any tax or
other governmental charge) by contacting the registrar and transfer agent, The
First National Bank of Chicago, One First National Plaza, Suite 0126, Chicago,
Illinois 60670.
Distribution payments will be made by check if the WEC Trust issues
certificated preferred securities. Payment of the redemption price or
liquidation amount will be made in immediately available funds when you
surrender the preferred security.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we and the WEC Trusts believe to be
accurate, but we and the WEC Trusts assume no responsibility for the accuracy
thereof. Neither we nor the WEC Trusts have any responsibility for the
performance by DTC or its participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
PLAN OF DISTRIBUTION
We and/or any WEC Trust may sell the securities in any one or more of the
following ways from time to time: (a) to or through underwriters or dealers;
(b) directly to one or more purchasers; or (c) through agents. The prospectus
supplement will set forth with respect to the securities being offered thereby
the terms of the offering of those securities, including the name or names of
any underwriters, the purchase price of those securities and the proceeds to us
and/or a WEC Trust from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, and any
securities exchange on which those securities may be listed. Only underwriters
so named in the applicable prospectus supplement are deemed to be underwriters
in connection with the securities offered thereby.
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. The
obligations of the underwriters to purchase those securities will be subject to
certain conditions precedent, and the underwriters
32
<PAGE>
will be obligated to purchase all the securities of the series offered by us
and/or the applicable WEC Trust and described in the applicable prospectus
supplement if any of those securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Securities may also be offered and sold, if so indicated in the prospectus
supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for us and/or an applicable WEC Trust. Any remarketing firm will be identified
and the terms of its agreement, if any, with us and its compensation will be
described in the prospectus supplement. Remarketing firms may be deemed to be
underwriters in connection with the securities remarketed thereby.
Securities may also be sold directly by us and/or a WEC Trust or through
agents designated by us from time to time. Any agent involved in the offering
and sale of the securities in respect of which this prospectus is delivered
will be named, and any commissions payable by us and/or a WEC Trust to such
agent will be set forth, in the prospectus supplement. Unless otherwise
indicated in the prospectus supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the prospectus supplement, we and/or a WEC Trust will
authorize agents, underwriters or dealers to solicit offers by certain
institutional investors to purchase securities providing for payment and
delivery on a future date specified in the prospectus supplement. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and such other
institutions as may be approved by us and/or a WEC Trust. The obligations of
any such purchasers pursuant to such delayed delivery and payment arrangements
will not be subject to any conditions except (a) the purchase by an institution
of the particular securities shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which such
institution is subject, and (b) if the particular securities are being sold to
underwriters, we and/or a WEC Trust shall have sold to such underwriters all of
those securities other than the securities covered by such arrangements.
Underwriters will not have any responsibility in respect of the validity of
such arrangements or the performance by us or such institutional investors
thereunder.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of securities that may stabilize,
maintain, or otherwise affect the price of those securities, such intention and
a description of such transactions will be described in the prospectus
supplement.
Agents and underwriters may be entitled under agreements entered into with
us and/or the applicable WEC Trust to indemnification by us against certain
civil liabilities, including liabilities under the Securities Act of 1933, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may engage in
transactions with, or perform services for, us and our subsidiaries in the
ordinary course of business.
CERTAIN LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplements, certain
legal matters in connection with the securities will be passed upon (a) for us
by Quarles & Brady LLP, Milwaukee, Wisconsin, our legal counsel, (b) for the
WEC Trusts (with respect to the validity of the preferred securities under
Delaware law) by Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware,
special Delaware counsel to us and the WEC Trusts, and (c) for any underwriters
by Cahill Gordon & Reindel (a partnership including a professional
corporation), New York, New York. Larry J. Martin, a partner in Quarles & Brady
LLP, serves as our general counsel.
33
<PAGE>
EXPERTS
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 1997, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
Future audited financial statements incorporated in this prospectus by
reference to future filings under the Exchange Act, as provided under "WHERE
YOU CAN FIND MORE INFORMATION," will be so incorporated in reliance on the
related report or reports of the firm of independent accountants auditing such
financial statements, given on such authority of such firm, if and to the
extent such filings include the consent of such firm to the incorporation of
such report or reports herein.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. and through our own web
site at http://wisenergy.com. You may also read and copy any document we file
at the SEC's public reference rooms in Washington, D.C., New York, and Chicago,
as well as at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York, 10005, where our common stock is listed under the symbol"WEC."
You can call the SEC at 1-800-732-0330 for further information about the public
reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
them, which means we are assumed to have disclosed important information to you
when we refer you to documents that are on file with the SEC. The information
we have incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future documents we file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the securities covered by this prospectus.
. Annual Report on Form 10-K for the fiscal year ended December 31, 1997
and Amendment No. 1 (on Form 10-K/A) dated June 27, 1998.
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998.
. Current Reports on Form 8-K dated December 23, 1997 and April 28, 1998.
You may request a copy of these documents at no cost by writing to us at the
following address:
Wisconsin Energy Corporation
231 West Michigan Street
P. O. Box 2949
Milwaukee, Wisconsin 53201
Attn: Mr. Thomas H. Fehring, Corporate Secretary
Telephone: (414) 221-2662
You should rely only on the information provided in or incorporated by
reference (and not later changed) in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you with additional
or different information. We are not making an offer of any securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6,000,000 Preferred Securities
WEC CAPITAL TRUST I
% Trust Preferred Securities (TruPS(R))
($25 liquidation amount per Preferred Security)
Fully and unconditionally guaranteed, as described herein, by
Wisconsin Energy Corporation [Logo Appears Here]
------------
PROSPECTUS SUPPLEMENT
, 1999
(Including prospectus dated , 1999)
------------
Salomon Smith Barney
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Robert W. Baird & Co.
Incorporated
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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 covered by this Registration Statement are as follows:
<TABLE>
<S> <C>
SEC registration fee (actual)................................... $ 83,400
Trustee's fee and expenses...................................... 26,000
Printing and engraving expenses................................. 65,000
Legal fees and expenses......................................... 150,000
Accounting fees and expenses.................................... 60,000
Rating agency fees.............................................. 90,000
New York Stock Exchange listing fees............................ 83,900
Miscellaneous................................................... 16,700
--------
Total....................................................... $575,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Wisconsin Energy Corporation ("Wisconsin Energy") is incorporated under the
Wisconsin Business Corporation Law (the "WBCL").
Under Section 180.0851(1) of the WBCL, Wisconsin Energy is required to
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding if such person was a party because he or she was a
director or officer of Wisconsin Energy. In all other cases, Wisconsin Energy
is required by Section 180.0851(2) to indemnify a director or officer against
liability incurred in a proceeding to which such person was a party because he
or she was a director or officer of Wisconsin Energy, unless it is determined
that he or she breached or failed to perform a duty owed to Wisconsin Energy
and the breach or failure to perform constitutes: (i) a willful failure to deal
fairly with Wisconsin Energy or its shareholders in connection with a matter in
which the director or officer has a material conflict of interest; (ii) a
violation of criminal law, unless the director or officer had reasonable cause
to believe his or her conduct was lawful or no reasonable cause to believe his
or her conduct was unlawful; (iii) a transaction from which the director or
officer derived an improper personal profit; or (iv) willful misconduct.
Section 180.0858(1) provides that, subject to certain limitations, the
mandatory indemnification provisions do not preclude any additional right to
indemnification or allowance of expenses that a director or officer may have
under Wisconsin Energy's Restated Articles of Incorporation, Bylaws, any
written agreement or a resolution of the Board of Directors or shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of the
State of Wisconsin to require or permit indemnification, allowance of expenses
and insurance to the extent required or permitted under Sections 180.0850 to
180.0858 of the WBCL, for any liability incurred in connection with a
proceeding involving a federal or state statute, rule or regulation regulating
the offer, sale or purchase of securities.
Section 180.0828 of the WBCL provides that, with certain exceptions, a
director is not liable to a corporation, its shareholders, or any person
asserting rights on behalf of the corporation or its shareholders, for damages,
settlements, fees, fines, penalties or other monetary liabilities arising from
a breach of, or failure to perform, any duty resulting solely from his or her
status as a director, unless the person asserting liability proves that the
breach or failure to perform constitutes any of the four exceptions to
mandatory indemnification under Section 180.0851(2) referred to above.
Under Section 180.0833 of the WBCL, directors of Wisconsin Energy against
whom claims are asserted with respect to the declaration of improper dividends
or distributions to shareholders or certain other improper acts which they
approved are entitled to contribution from other directors who approved such
actions and from shareholders who knowingly accepted an improper dividend or
distribution, as provided therein.
II-1
<PAGE>
Articles V and VI of Wisconsin Energy's Bylaws provides that Wisconsin
Energy will indemnify to the fullest extent permitted by law any person who is
or was a party or threatened to be made a party to any legal proceeding by
reason of the fact that such person is or was a director or officer of
Wisconsin Energy, or is or was serving at the request of Wisconsin Energy as a
director or officer of another enterprise, against expenses (including attorney
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such legal proceeding. Wisconsin
Energy's Restated Articles of Incorporation and Bylaws do not limit the
indemnification to which directors and officers are entitled under the WBCL.
Officers and directors of Wisconsin Energy are covered by insurance policies
purchased by Wisconsin Energy under which they are insured (subject to
exceptions and limitations specified in the policies) against expenses and
liabilities arising out of actions, suits or proceedings to which they are
parties by reason of being or having been such directors or officers.
Under each trust agreement, Wisconsin Energy will agree to indemnify each of
the issuer trustees of the WEC Trusts or any predecessor issuer trustee for the
WEC Trusts, and to hold the issuer trustees harmless against, any loss, damage,
claims, liability or expense incurred without negligence or bad faith or its
part, arising out of or in connection with the acceptance or administration of
the trust agreements, 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 under the trust agreements.
Item 16. Exhibits.
See Exhibit Index following the Signatures page in this Registration
Statement, which Exhibit Index is incorporated herein by reference.
Item 17. Undertakings.
The undersigned Registrants hereby undertake (in accordance with the
corresponding lettered undertakings in Item 512 of Regulation S-K):
(a) (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
Securities Act of 1933;
(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 (a)(1)(i) and (a)(1)(ii) of this
section 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 by the
Registrant with the Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 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.
(h) Reference is made to the indemnification provisions described in
Item 15 of this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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.
(i) (1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Milwaukee, State of Wisconsin, on March 12,
1999.
WISCONSIN ENERGY CORPORATION
(Registrant)
/s/ C. H. Baker
By: ____________________________
C. H. Baker,
Treasurer and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated as of the 12th day of March, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ R. A. Abdoo* Chairman of the Board, President and Chief
___________________________________________ Executive Officer (Principal Executive
R. A. Abdoo Officer)
and Director
/s/ C. H. Baker Treasurer and Chief Financial Officer
___________________________________________ (Principal Financial Officer)
C. H. Baker
/s/ A. K. Klisurich* Controller (Principal Accounting Officer)
___________________________________________
A. K. Klisurich
/s/ J. F. Ahearne* Director
___________________________________________
J. F. Ahearne
/s/ J. F. Bergstrom* Director
___________________________________________
J. F. Bergstrom
/s/ B. L. Bowles* Director
___________________________________________
B. L. Bowles
/s/ R. A. Cornog* Director
___________________________________________
R. A. Cornog
/s/ R. R. Grigg, Jr.* Director
___________________________________________
R. R. Grigg, Jr.
/s/ G. B. Johnson* Director
___________________________________________
G. B. Johnson
/s/ J. N. MacDonough* Director
___________________________________________
J. N. MacDonough
/s/ J. B. North* Director
___________________________________________
J. B. North
/s/ F. P. Stratton, Jr.* Director
___________________________________________
F. P. Stratton, Jr.
</TABLE>
* By signing his name hereto, C. H. Baker signs this document on behalf of
each person indicated above pursuant to the power of attorney duly
executed by such persons.
/s/ C. H. Baker
By: ____________________________
C. H. Baker,
Attorney-in-Fact
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, WEC Capital
Trust I 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 Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on
March 12, 1999.
WEC CAPITAL TRUST I
(Registrant)
By: Wisconsin Energy Corporation,
as Depositor
/s/ C. H. Baker
By: ____________________________
C. H. Baker
Treasurer and Chief Financial
Officer
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, WEC Capital
Trust II 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 Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on
March 12, 1999.
WEC CAPITAL TRUST II
(Registrant)
By: Wisconsin Energy Corporation,
as Depositor
/s/ C. H. Baker
By: ____________________________
C. H. Baker
Treasurer and Chief Financial
Officer
II-6
<PAGE>
WISCONSIN ENERGY CORPORATION
(the "Company")
(Commission File No. 1-9057)
EXHIBIT INDEX
TO
FORM S-3 REGISTRATION STATEMENT
The following exhibits are filed with or incorporated by reference in this
Registration Statement:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
1.1*** Form of Underwriting Agreement for Debt Securities
1.2* Form of Underwriting Agreement for Preferred Securities
4.1** Form of Indenture for Debt Securities
4.2** Form of Securities Resolution
4.3** Certificate of Trust of WEC Capital Trust I
4.4** Trust Agreement of WEC Capital Trust I
4.5** Certificate of Trust of WEC Capital Trust II
4.6** Trust Agreement of WEC Capital Trust II
4.7** Form of Amended and Restated Trust Agreement for WEC Capital Trusts I
and II
4.8** Form of Preferred Security Certificate for WEC Capital Trusts I and II
(incorporated by reference to Exhibit D of Exhibit 4.7)
4.9** Form of Guarantee Agreement for WEC Capital Trusts I and II
5.1** Opinion of Quarles & Brady LLP
5.2** Opinion of Morris, Nichols, Arsht & Tunnell as to the legality of the
Preferred Securities to be issued by WEC Capital Trust I and WEC
Capital Trust II
8*** Opinion re tax matters of Quarles & Brady LLP
12** Statement of Computation of Ratio of Earnings to Fixed Charges
23.1** Consent of PricewaterhouseCoopers LLP
23.2** Consent of Quarles & Brady LLP
23.3** Consent of Morris, Nichols, Arsht & Tunnell
24** Power of Attorney
25.1** Form T-1, Statement of Eligibility under the Trust Indenture Act of
1939 of The First National Bank of Chicago with respect to the
Indenture for Debt Securities and the Guarantees for the benefit of
the holders of Preferred Securities of WEC Capital Trust I and WEC
Capital Trust II
25.2** Form T-1, Statement of Eligibility under the Trust Indenture Act of
1939 of The First National Bank of Chicago with respect to the Amended
and Restated Trust Agreement of WEC Capital Trust I
25.3** Form T-1, Statement of Eligibility under the Trust Indenture Act of
1939 of The First National Bank of Chicago with respect to the Amended
and Restated Trust Agreement of WEC Capital Trust II
</TABLE>
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* Filed herewith.
**Previously filed.
***To be filed by amendment or under cover of Form 8-K and incorporated herein
by reference.
II-7
<PAGE>
EXHIBIT 1.2
[FORM OF UNDERWRITING AGREEMENT FOR
TRUST PREFERRED SECURITIES]
WEC CAPITAL TRUST [ ]
[ ] TRUST PREFERRED SECURITIES, SERIES [ ]
(liquidation amount $[ ] per preferred security) guaranteed
on a junior subordinated basis by Wisconsin Energy Corporation
UNDERWRITING AGREEMENT
[Date]
To the Underwriters set forth
on Schedule A hereto
Ladies and Gentlemen:
WEC Capital Trust [ ], a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), and Wisconsin Energy Corporation, a
Wisconsin corporation, as depositor of the Trust and as guarantor (the "Company"
and, together with the Trust, the "Issuers"), propose subject to the terms and
conditions stated herein, that the Trust issue and sell to Underwriters named in
Schedule A hereto (the "Underwriters") an aggregate of [ ] [ ]% Trust
Preferred Securities, Series [ ] (liquidation amount $[ ] per preferred
security) further set forth in Schedule B hereto representing beneficial
interests in the Trust (the "Securities"), guaranteed on a junior subordinated
basis by the Company as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement to
be dated [ ], [ ] (the "Guarantee") between the Company and The First
National Bank of Chicago, as trustee (the "Guarantee Trustee"). The Trust is to
purchase, with the proceeds of the sale of the Securities to the Underwriters
and the sale of its Common Securities (liquidation amount $[ ] per common
security) (the "Common Securities") to the Company, an aggregate of $[ ]
Corresponding Junior Subordinated Debentures (the "Corresponding Junior
Subordinated Debentures") of the Company, to be issued pursuant to a securities
resolution with respect to an indenture (the "Indenture") dated as of
[ ], [ ] between the Company and The First National Bank of Chicago,
as trustee (the "Corresponding Debt Trustee"). The payments made by the Company
on the Corresponding Junior Subordinated Debentures are established at a level
sufficient to permit the Trust, upon receipt of such payments, to make payments
on the Securities in accordance with their terms.
<PAGE>
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The Issuers understand that the Underwriters propose to make a public
offering of the Securities as soon as their representative or representatives
(the "Representatives") deem advisable after this Agreement has been executed
and delivered.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Issuers. Each of the
Issuers jointly and severally represents and warrants to each Underwriter as of
the date hereof and as of the Closing Time referred to in Section 2(b) hereof,
and agrees with each Underwriter, as follows:
(i) Compliance with Registration Requirements. The Issuers meet the
requirements for use of Form S-3 under the Securities Act of 1933, as
amended (the "1933 Act"). The Issuers have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on such
Form (File No. 333-73137), which has become effective (including
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the 1933 Act), for the
registration under the 1933 Act of the Securities. Such registration
statement meets the requirements set forth in Rule 415(a)(1)(x) under the
1933 Act and complies in all other material respects with said Rule, and as
amended at the date of this Agreement, including the exhibits thereto, is
hereinafter called the "Registration Statement". The form of prospectus
included in such Registration Statement is hereinafter called the "Basic
Prospectus"; the form of prospectus supplement included in such
Registration Statement, or, if the Company files with the Commission a
subsequent prospectus supplement to be used in connection the issuance and
sale of the Securities under the Prospectus in accordance with Rule 424(b)
under the 1933 Act, such subsequent prospectus, is hereinafter called the
"Prospectus Supplement"; and the Basic Prospectus, as supplemented by the
Prospectus Supplement, in the form in which it shall be filed with the
Commission pursuant to Rule 424(b) is hereinafter called the "Prospectus".
Any preliminary form of the Prospectus which has heretofore been filed
pursuant to Rule 424(b) is hereinafter called the "Preliminary Prospectus".
Any reference herein to the Registration Statement, the Basic Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "1934 Act"), on or before the date of this Agreement,
or the issue date of the Basic Prospectus, any Preliminary Prospectus or
the Prospectus, as the case may be; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the 1934 Act after the date of this
<PAGE>
-3-
Agreement, or the issue date of the Basic Prospectus, any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
(ii) No Misstatements or Omissions. As of the date hereof, when
the Prospectus is first filed or transmitted for filing pursuant to Rule
424(b) under the 1933 Act, when, prior to the Closing Date (as hereinafter
defined), any amendment to the Registration Statement becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), when any supplement to the Prospectus is filed
with the Commission and at the Closing Date, (i) the Registration
Statement, as then amended as of any such time, and the Prospectus, as then
amended or supplemented as of such time, and each of the Trust Agreement
(as defined below), the Indenture and the Guarantee will comply in all
material respects with the applicable requirements of the 1933 Act, the
Trust Indenture Act of 1939, as amended (the "1939 Act"), and the 1934 Act
and the respective rules and regulations thereunder (the "1934 Act
Regulations") and (ii) neither the Registration Statement, as then amended
as of such time, nor the Prospectus, as then amended or supplemented, as of
such time, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; provided, however, that the
Company makes no representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statement of Eligibility
(Form T-1) under the 1939 Act of the applicable trustees or (ii) the
information contained in or omitted from the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representatives specifically
for use in connection with the preparation of the Registration Statement
and the Prospectus.
(iii) Status of Trust. The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the Business
Trust Act of the State of Delaware with the power and authority to enter
into and perform its obligations under this Agreement, the Securities, the
Common Securities and the Trust Agreement (as defined below) and to own
property and conduct its business as described in the Prospectus, and has
conducted and will conduct no business other than the transactions
contemplated by this Agreement and as described in the Prospectus; the
Trust is not a party to or bound by any agreement or instrument other than
this Agreement, the Amended and Restated Trust Agreement (the "Trust
Agreement") between the Company and the trustees named therein (the
"Trustees") and the agreements and instruments contemplated by the Trust
Agreement and the Prospectus.
(iv) Authorization of Common Securities. The Common Securities have
been duly authorized by the Trust and upon delivery by the Trust to the
Company
<PAGE>
-4-
against payment therefor as described in the Prospectus, will be duly and
validly issued and fully paid and non-assessable beneficial interests in
the Trust and will conform to the description thereof contained in the
Prospectus; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and at the Closing Time, all of the
issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(v) Authorization of Securities. The Securities have been duly
authorized by the Trust, and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and, subject
to the qualifications set forth herein, fully paid and non-assessable
beneficial interests in the Trust and will conform in all material respects
to the description thereof contained in the Prospectus; the issuance of the
Securities is not subject to preemptive or other similar rights; and the
holders of the Securities (the "Securityholders") will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware (subject to the obligations of the Securityholders under
the Trust Agreement to make certain payments to the Trust to defray
expenses such as any applicable transfer and stamp taxes and to provide
security or indemnity in connection with the replacement of destroyed, lost
or stolen certificates or in connection with directing the Property Trustee
under the Trust Agreement to exercise its rights and powers at the request
of Securityholders).
(vi) Authorization of Company Agreements. The Guarantee, the
Corresponding Junior Subordinated Debentures, the Trust Agreement and the
Indenture (collectively, the "Company Agreements") have each been duly
authorized by the Company and when validly executed and delivered by the
Company and, in the case of the Guarantee, by the Guarantee Trustee, in the
case of Trust Agreement, by the Trustees and, in the case of the Indenture,
by the Corresponding Debt Trustee, and, in the case of Corresponding Junior
Subordinated Debentures, when validly issued by the Company and validly
authenticated and delivered by the Corresponding Debt Trustee, will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; the Trust Agreement, the Indenture and the
Guarantee have been duly qualified under the 1933 Act, as amended; the
Corresponding Junior Subordinated Debentures are entitled to the benefits
of the Indenture; and the Company Agreements will conform to the
descriptions thereof in the Prospectus.
<PAGE>
-5-
(vii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by each of the Issuers.
(viii) Absence of Defaults and Conflicts. None of the Company, the
Trust or any "significant subsidiary" of the Company (as such term is
defined in Rule 1-02 of Regulation S-X (each a "Subsidiary" and,
collectively, the "Subsidiaries") and each of which is listed on Schedule C
hereto) is in violation of its charter, by-laws or other organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company, the Trust or any of its
Subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company, the Trust or any
Subsidiary is subject (collectively, "Agreements and Instruments") except
for such defaults that would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries, taken as a whole,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"); and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by each of the Trust and the Company with its obligations
hereunder have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company, the Trust or any Subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter, by-laws or other organizational documents of the
Company, the Trust or any Subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company, the Trust or any Subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, the Trust or any Subsidiary.
<PAGE>
-6-
(ix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by each of the Issuers of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or made or as may be required under the 1933 Act or the rules and
regulations of the Commission thereunder (the "1933 Act Regulations") or
state securities laws and except for the qualification of the Trust
Agreement, the Indenture and the Guarantee under the 1939 Act.
(x) Investment Company Act. Each of the Issuers is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(b) Officer's Certificates. Any certificate signed by any officer of
the Company, any of its Subsidiaries or the Trust delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company and the Trust to each Underwriter as
to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Issuers agree to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Issuers, at
the price and with the terms set forth in Schedule B, the number of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of the
Representatives, or at such other place as shall be agreed upon by the
Representatives and the Company at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
(such time and date of payment and delivery being herein called "Closing Time").
<PAGE>
-7-
Payment shall be made to the Trust by wire transfer of immediately
available or next day funds as set forth in Schedule B to a bank account(s)
designated by the Trust against delivery to the Representatives for the
respective accounts of the Underwriters of certificates for the Securities to be
purchased by them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities which it has agreed to
purchase.
(c) Denominations; Registration. Certificates for the Securities shall
be in such denominations and registered in such names as the Representatives may
request in writing at least one full business day before the Closing Time. The
certificates for the Securities will be made available for examination and
packaging by the Representatives in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time.
SECTION 3. Covenants of the Issuers. Each of the Issuers jointly and
severally covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
Subject to Section 3(b), it will prepare the Prospectus in a form approved
by the Representatives and file such Prospectus (pursuant to Rule 424(b)
within the time prescribed under Rule 424(b) or Rule 430(A)(3), as the case
may be) and will notify the Representatives immediately, and confirm the
notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. It will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. It will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. It will give the Representatives notice of
its intention to file or prepare any amendment to the Registration
Statement or any amendment, supplement or revision to the Prospectus,
whether pursuant to the 1933
<PAGE>
-8-
Act, the 1934 Act or otherwise, will furnish the Representatives with
copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any
such document to which the Representatives or counsel for the Underwriters
shall object.
(c) Delivery of Registration Statements. It has furnished or will
deliver to the Representatives and counsel for the Underwriters, without
charge, two originally signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and two originally
signed copies of all consents and certificates of experts, and will also
deliver to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR"), except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectuses. It has delivered to each Underwriter,
without charge, as many copies of each Preliminary Prospectus relating to
the Securities as such Underwriter reasonably requested, and it hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
It will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(e) Continued Compliance with Securities Laws. It will comply with the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at
any time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the Underwriters or for the Issuers, to amend the Registration
Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in
<PAGE>
-9-
the opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, it will promptly
prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply
with such requirements, and it will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may
reasonably request.
(f) Blue Sky Qualifications. It will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representatives may designate
and to maintain such qualifications in effect for a period of not less than
one year from the later of the effective date of the Registration
Statement; provided, however, that it shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which they
are not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which they are not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, it will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement.
(g) Rule 158. It will timely file such reports pursuant to the 1934
Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. It will cause the net proceeds received by the
Trust from the sale of the Securities to be used in the manner specified in
the Prospectus under "Use of Proceeds".
(i) Listing. It will use its best efforts to cause the listing of the
Securities on any such stock exchange or exchanges as are set forth in
Schedule B hereto.
(j) Restriction on Sale of Securities. During a period of 30 days
following the Closing Time, it will not, without the prior written consent
of the Representatives, sell or contract to sell or announce the offering
of, any securities of either of the Issuers with characteristics and terms
similar to those of the Securities.
<PAGE>
-10-
(k) Reporting Requirements. During the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, the Company
will file or cause to be filed all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Issuers will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits and the Form T-1) as originally
filed and of each amendment thereto, (ii) the preparation, printing,
reproduction and delivery to the Underwriters of this Agreement, any Agreement
among Underwriters, the Indenture, the Trust Agreement, the Guarantee and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Issuers' counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith, (vi)
the printing and delivery to the Underwriters of copies of each Preliminary
Prospectus and of the Prospectus and any amendments or supplements thereto,
(vii) the fees and expenses of the Trustee, including the fees and disbursements
of counsel for the Trustee in connection with the Indenture and the Securities,
(viii) any fees payable in connection with the rating of the Securities, (ix)
the fees and expenses incurred in connection with the listing, if applicable, of
the Securities on any such exchange or exchanges as are listed on Schedule B
hereto, (x) all fees and expenses of trustees, and (xi) the fees and expenses
incident to the performance of the Issuers' other obligations hereunder.
(b) Termination of Agreement. If this Agreement is terminated by
the Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Issuers shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
<PAGE>
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SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Issuers contained in Section 1(a) hereof
or in certificates of any officer of the Issuers or any Subsidiary of the
Company delivered pursuant to the provisions hereof, to the performance by each
of the Issuers of its respective covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Prospectus shall have
been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the 1933 Act
Regulations and in accordance with Section 3(a) hereof; and no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission.
(b) Opinion of Counsel for Company and Trust. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of (i) Quarles & Brady LLP, counsel for the Issuers, to the
effect set forth in Exhibit A-1 hereto and (b) Sally R. Bentley, Esq.,
Counsel for the Issuers to the effect set forth in Exhibit A-2 hereto, each
in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters and addressed to the Underwriters and to such further
effect as counsel to the Underwriters may reasonably request. In giving
such opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of Wisconsin and the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company, the Trust and the Company's
Subsidiaries, certificates of representatives of the applicable trustees
and certificates of public officials. In rendering its opinion, Quarles &
Brady LLP may rely as to the exempt status of the Company under the Public
Utility Holding Company Act, upon the opinion of Sally R. Bentley, Esq.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Cahill Gordon & Reindel, the counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters and addressed to the Underwriters with respect to such
matters as the Representatives may reasonably request. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal
law of the United States and the General Corporation Law of the State of
Delaware, upon the
<PAGE>
-12-
opinions of counsel satisfactory to the Representatives. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of the Company, the Trust and the Company's Subsidiaries, certificates of
representatives of the applicable Trustees and certificates of public
officials.
(d) Opinion of Special Delaware Counsel. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Morris, Nichols, Arsht & Tunnell, special Delaware counsel
for the Issuers, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters and addressed to the Underwriters to the
effect set forth in Exhibit B hereto and to such further effect as counsel
to the Underwriters may reasonably request. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to
the Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Trust, the Company and the
Company's Subsidiaries, certificates of representatives of the applicable
trustees and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) each of the Trust and the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are, to
the knowledge of such officers, contemplated by the Commission.
(f) Trust Performance. The Trust shall have performed all of its
obligations under this Agreement which are to be performed by the terms
hereof at or before the Closing Time.
<PAGE>
-13-
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from the Company's
independent public accountants a letter dated such date, in form and
substance satisfactory to the Representatives (substantially in the form of
Annex A hereto), together with signed or reproduced copies of such letter
for each of the other Underwriters and addressed to the Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from the Company's independent public accountants a
letter, dated as of Closing Time, together with signed or reproduced copies
of such letter for each of the other Underwriters and addressed to the
Underwriters, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (g) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to Closing Time.
(i) Maintenance of Rating. At Closing Time, the Securities shall be
rated by each of Moody's Investor's Service Inc. and Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. as set forth in Schedule B
hereto. Since the date of this Agreement, there shall not have occurred a
downgrading in the rating assigned to the Securities or any of the
Company's debt securities by any "nationally recognized statistical rating
agency," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such organization shall have publicly
announced that is has under surveillance or review its rating of the
Securities or any of the Company's other debt securities.
(j) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on such exchange or exchanges as are listed on
Schedule B hereto, subject only to official notice of issuance.
(k) Additional Documents. At Closing Time counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Issuers in connection with the issuance and sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
<PAGE>
-14-
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representatives by notice to the
Issuers at any time at or prior to Closing Time and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. Each of the Issuers agrees
jointly and severally to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Issuers; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above;
provided, however, that (i) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or al-
<PAGE>
-15-
leged untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Issuers by any Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) and (ii) such indemnity with respect to any
Preliminary Prospectus or the Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, liability, claim, damage or expense purchased the
Securities which are the subject thereof if such person did not receive a copy
of the Prospectus (or the Prospectus, as amended or supplemented) excluding
documents incorporated therein by reference at or prior to the confirmation of
the sale of the Securities to such person in any case where such delivery is
required by the 1933 Act and the untrue statement or omission of a material fact
contained in any Preliminary Prospectus or the Prospectus was corrected in the
Prospectus (or the Prospectus, as amended or supplemented). This indemnity
agreement will be in addition to any liability which the Issuers may otherwise
have.
(b) Indemnification of Issuers, Trustees, Directors and Officers.
Each Underwriter severally agrees to indemnify and hold harmless the Issuers,
their respective directors or trustees, each of their officers who signed the
Registration Statement, and each person, if any, who controls either of the
Issuers within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Issuers by such Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or such Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
6(a) above, counsel to the indemnified parties shall be selected by the
Representatives, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the Issuers.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event
<PAGE>
-16-
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Issuers on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting ex-
<PAGE>
-17-
penses) received by the Issuers and the total underwriting discount received by
the Underwriters, in each case as set forth on the cover of the Prospectus, bear
to the aggregate initial public offering price of the Securities as set forth on
such cover.
The relative fault of the Issuers on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Issuers or by an Underwriter in writing through the
Representatives and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 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 the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 any 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 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company or trustee of the Trust, each officer of the
Company or the Trust who signed the Registration Statement, and each person, if
any, who controls either of the Issuers within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as Issuers. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the number of Securities
set forth opposite their respective names in Schedule A hereto and not joint.
<PAGE>
-18-
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Trust, Company or any
Subsidiaries of the Company submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on behalf of the
Issuers, and shall survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Issuers, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise or the Trust, whether or not arising
in the ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Representatives, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
any securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited (other than to provide for an
orderly market), or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time to purchase the Securities
which it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such principal amounts as may be agreed upon and
upon the
<PAGE>
-19-
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of the Defaulted Securities does
not exceed 10% of the aggregate principal amount of the Securities to be
purchased on such date, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof
in the proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of the Defaulted Securities
exceeds 10% of the aggregate principal amount of the Securities to be
purchased on such date, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement either (i) the Representatives or (ii) the Issuers
shall have the right to postpone Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at the address set forth
on Schedule B; notices to the Issuers shall be directed to them at 231 West
Michigan Street, Milwaukee, Wisconsin 53201, attention of Chief Financial
Officer.
SECTION 12. Parties. This Agreement shall each inure to the
benefit of and be binding upon the Underwriters, the Issuers and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Issuers and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Issuers and
their respective successors, and said controlling persons and officers,
directors,
<PAGE>
-20-
trustees and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
-21-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Issuers and the Underwriters.
Very truly yours,
WISCONSIN ENERGY CORPORATION
By: ___________________________________
Name:
Title:
WEC CAPITAL TRUST [ ]
By: ___________________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first written above.
[NAME(S) OF REPRESENTATIVE(S)]
By: ____________________________
Authorized Signatory
For itself and the other Under-
writers, if any, named in
Schedule A to the foregoing
Agreement
<PAGE>
SCHEDULE A
WEC CAPITAL TRUST [ ]
<TABLE>
<CAPTION>
Number of
Preferred
Underwriter Securities
----------- ----------
<S> <C>
$
Total............................................................ $
=====================
</TABLE>
<PAGE>
SCHEDULE B
WEC CAPITAL TRUST [ ]
Title: [ %] Trust Preferred Securities, Series [ ].
Liquidation Amount [at Maturity]: $ (liquidation amount $[
] per preferred security).
Distributions: [ % per annum, from , , payable
[quarterly] on , , and , commencing
, , to holders of record on the preceding on , ,
or , as the case may be.]
Maturity: , .
Optional Redemption:
Sinking Fund:
Listing:
Rating: Moody's Investor's Service Inc.:
Standard & Poor's Ratings Group:
Purchase Price: % of liquidation amount, plus accrued distributions
[, if any,] from , .
Expected Reoffering Price: % of liquidation amount, subject to
change by the [Representative[s] [Underwriters].
Closing: A.M. on , , at the offices of [ ], [[in New
York] [Chicago] Clearing House (next day)] [Federal (same day)] funds.
Settlement and Trading: [Physical certificated form.] [Book-Entry
Only via the Depository Trust Company ("DTC"). The Securities [will] [will not]
trade in DTC's Same Day Funds Settlement System.]
Notices: Notices to be given to the Underwriters should be directed
to the Representatives as follows:
The respective numbers of the Securities to be purchased by each of the
Underwriters are set forth opposite their names in Schedule A hereto.
<PAGE>
SCHEDULE C
WISCONSIN ENERGY CORPORATION
List of Significant Subsidiaries
A-1
<PAGE>
Exhibit A-1
FORM OF OPINION OF ISSUERS' COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
Capitalized terms used herein shall have the same definitions as set
forth in the underwriting agreement (the "Agreement") to which this Exhibit A is
attached.
(i) The Company has been duly incorporated and is validly existing as
a corporation in active status under the laws of the State of Wisconsin.
(ii) The Agreement has been duly authorized, executed and delivered
by the Company.
(iii) The Guarantee, the Corresponding Junior Subordinated
Debentures, the Trust Agreement and the Indenture have each been duly authorized
by the Company and when validly executed and delivered by the Company and, in
the case of the Guarantee, by the Guarantee Trustee, in the case of Trust
Agreement, by the Trustees and, in the case of the Indenture, by the
Corresponding Debt Trustee, and, in the case of Corresponding Junior
Subordinated Debentures, when validly issued by the Company and validly
authenticated and delivered by the Corresponding Debt Trustee, will constitute
valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; the Trust Agreement, the
Indenture and the Guarantee have been duly qualified under the 1939 Act; the
Corresponding Junior Subordinated Debentures are entitled to the benefits of the
Indenture; and the Company Agreements conform in all material respects to the
descriptions thereof in the Prospectus.
(iv) The Registration Statement has been declared effective under the
1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); and, to
the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(v) The Registration Statement, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom and the Statements of Eligibility on Form T-1 of the
applicable trustees, as to which we express no opinion) appear on their face to
comply as
A-1
<PAGE>
to form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1939 Act.
(vi) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we express no opinion), when they became
effective or were filed with the Commission, as the case may be, appear on their
face to comply as to form in all material respects with the requirements of the
1933 Act or the 1934 Act, as applicable, and the rules and regulations of the
Commission thereunder.
(vii) To the best of our knowledge, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign (other than under
the 1933 Act and the 1933 Act Regulations and the 1939 Act, which have been
obtained or made, or as may be required under the securities or blue sky laws of
the various states, as to which we express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the
Agreement or for the offering, issuance, sale or delivery of the Securities.
(viii) Neither the Company nor the Trust is an "investment company"
or an entity "controlled" by an "investment company," as such terms are defined
in the 1940 Act.
(ix) The Trust Agreement, the Indenture and the Guarantee have been
duly qualified under the 1939 Act.
(x) The Securities, the Common Securities, the Guarantee and the
Corresponding Junior Subordinated Debentures conform as to legal matters in all
material respects to the statements concerning them in the Prospectus.
(xi) The statements made in the Prospectus under the caption "United
States Taxation" to the extent they matters of law or legal conclusions, have
been reviewed by such counsel and are accurate and correct in all material
respects and fairly present the information set forth therein, and that the
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be taxable as a corporation.
We have participated in conferences with officers and other
representatives of the Issuers, representatives of the Underwriters and
representatives of the independent public accountants for the Issuers at which
conferences the contents of the Prospectus and the Registration Statement and
related matters were discussed and, although we have not independently verified,
are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as otherwise indicated above), we advise you
that, on the basis of the foregoing (relying as to materiality to the extent we
deem appropriate upon the opinions of officers and other representatives of the
Issuers), no facts have come to our attention that lead us to believe that the
Registration Statement or any amendment thereto, at the time such Registration
Statement or any such amendment became effective, contained an untrue statement
of a
A-2
<PAGE>
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, as of its date or as of 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 (it being understood
that we express no comment with respect to the Forms T-1 or the financial
statements, including the notes thereto, or any other financial or statistical
data found in or derived from the internal accounting and other records of the
Company and its Subsidiaries set forth or referred to in the Registration
Statement or the Prospectus).
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Trust, the Company and its
Subsidiaries, representatives of the applicable trustees and public officials.
In giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of Wisconsin and the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives.
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
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Exhibit A-2
FORM OF OPINION OF ISSUERS' COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
Capitalized terms used herein shall have the same definitions as set
forth in the underwriting agreement (the "Agreement") to which this Exhibit A is
attached.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Wisconsin.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Agreement.
(iii) Each Subsidiary set forth on Schedule C to the Agreement has been
duly incorporated and is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus; except as otherwise disclosed in the Registration Statement, all of
the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable (except as
otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law, as judicially interpreted) and, to the best of our knowledge,
is owned by the Company, directly or through Subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; to the
best of our knowledge, none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.
(iv) The Agreement has been duly authorized, executed and delivered by the
Company.
(v) The Guarantee, the Corresponding Junior Subordinated Debentures, the
Trust Agreement and the Indenture have each been duly authorized by the Company
and when validly executed and delivered by the Company and, in the case of the
Guarantee, by the Guarantee Trustee, in the case of Trust Agreement, by the
Trustees and, in the case of the Indenture, by the Corresponding Debt Trustee,
and, in the case of Corresponding Junior Subordinated Debentures, when validly
issued by the Company and validly authenticated and delivered by the
Corresponding Debt Trustee, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; the Trust Agreement, the
Indenture and the Guarantee have been duly qualified under the 1939 Act, as
amended; the
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Corresponding Junior Subordinated Debentures are entitled to the benefits of the
Indenture; and the Company Agreements conform in all material respects to the
descriptions thereof in the Prospectus.
(vi) The Registration Statement has been declared effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(vii) The Registration Statement, the Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the
Registration Statement and Prospectus, excluding the documents incorporated by
reference therein, as of their respective effective or issue dates (other than
the financial statements and supporting schedules included therein or omitted
therefrom and the Statements of Eligibility on Form T-1 of the applicable
trustees, as to which we express no opinion) appear on their face to comply as
to form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1939 Act.
(viii) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we express no opinion), when they became
effective or were filed with the Commission, as the case may be, appear on their
face to comply as to form in all material respects with the requirements of the
1933 Act or the 1934 Act, as applicable, and the rules and regulations of the
Commission thereunder.
(ix) To the best of our knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
(x) All descriptions in the Registration Statement of written contracts and
other documents to which the Company or its Subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xi) To the best of our knowledge, neither the Company nor any Subsidiary
is in violation of its charter or by-laws and no default by the Company or any
Subsidiary exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
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(xii) To the best of our knowledge, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign (other than under
the 1933 Act and the 1933 Act Regulations and the 1939 Act, which have been
obtained or made, or as may be required under the securities or blue sky laws of
the various states, as to which we express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the
Agreement or for the offering, issuance, sale or delivery of the Securities.
(xiii) The execution, delivery and performance of the Agreement and the
Company Agreements and the consummation of the transactions contemplated in the
Agreement and in the Registration Statement (including the issuance and sale of
the Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by each of the Company and the Trust with its obligations under the Agreement
and the Company Agreements do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a breach
of, or default or similar event under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary pursuant to any written contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company or any Subsidiary is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any Subsidiary is subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any Subsidiary, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us, of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties, assets or operations.
(xiv) Neither the Company nor the Trust is an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
1940 Act.
(xv) The Trust Agreement, the Indenture and the Guarantee have been duly
qualified under the 1939 Act.
(xvi) The Securities, the Common Securities, the Guarantee and the
Corresponding Junior Subordinated Debentures conform as to legal matters in all
material respects to the statements concerning them in the Prospectus.
(xvii) The Company is exempt from the provisions of the Public Utility
Holding Company Act of 1935, as amended (the "Public Utility Holding Company
Act"), except Section 9(a)(2) thereof relating to the acquisition of securities
of other public utility companies.
We have participated in conferences with officers and other
representatives of the Issuers, representatives of the Underwriters and
representatives of the independent public
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accountants for the Issuers at which conferences the contents of the Prospectus
and the Registration Statement and related matters were discussed and, although
we have not independently verified, are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except as otherwise
indicated above), we advise you that, on the basis of the foregoing (relying as
to materiality to the extent we deem appropriate upon the opinions of officers
and other representatives of the Issuers), no facts have come to our attention
that lead us to believe that the Registration Statement or any amendment
thereto, at the time such Registration Statement or any such amendment 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, as of its date or as
of 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 (it being understood that we express no comment with
respect to the Forms T-1 or the financial statements, including the notes
thereto, or any other financial or statistical data found in or derived from the
internal accounting and other records of the Company and its Subsidiaries set
forth or referred to in the Registration Statement or the Prospectus).
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Trust, the Company and its
Subsidiaries, representatives of the applicable trustees and public officials.
In giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of Wisconsin and the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives.
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
A-4
<PAGE>
Exhibit B
FORM OF OPINION OF DELAWARE COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(d)
Capitalized terms used herein shall have the same definitions as set
forth in the underwriting agreement (the "Agreement") to which this Exhibit B is
attached.
(i) The Trust is a duly formed and validly existing statutory business
trust in good standing under the Business Trust Act of the State of
Delaware with the business trust power and authority to enter into and
perform its obligations under this Agreement, the Securities, the Common
Securities and the Trust Agreement and to own property and conduct its
business as described in the Prospectus.
(ii) Under the Delaware Business Trust Act and the Trust Agreement,
the execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all necessary business trust action on the part of the Trust.
(iii) The Trust Agreement constitutes a valid and binding obligation
of the Company and the Trustees, enforceable against the Company and the
Trustees, in accordance with its terms, subject, as to enforcement, to the
effect upon the Trust Agreement of (a) bankruptcy, insolvency, moratorium,
receivership, liquidation, fraudulent conveyance, reorganization and other
similar laws relating to or affecting the remedies and rights of creditors,
(b) general principles of equity (regardless of whether considered or
applied in a proceeding in equity or at law), (c) considerations of public
policy or the effect of applicable law relating to fiduciary duties, and
(iv) principles of course of dealing or course of performance and standards
of good faith, fair dealing, materiality or reasonableness that may be
applied by a court to the exercise of rights or remedies.
(iv) The Common Securities have been duly authorized for issuance by
the Trust and upon issuance and delivery by the Trust to the Company
against payment therefor as described in the Trust Agreement, will be duly
and validly issued and, subject to the qualifications set forth herein,
fully paid and non-assessable beneficial interests in the Trust; the
issuance of the Common Securities is not subject to preemptive or other
similar rights under the Trust Agreement or the Business Trust Act provide
that such counsel may note that the holders of Common Securities may be
required to make payment or provide indemnity or security as set forth in
the Trust Agreement.
(v) The Securities have been duly authorized for issuance by the
Trust, and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and, subject to the qualifications
set forth herein, fully paid
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<PAGE>
and non-assessable beneficial interests in the Trust; the issuance of the
Securities is not subject to preemptive or other similar rights under the
Trust Agreement or the Business Trust Act; and the Securityholders will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; provided that such counsel need
express no opinion as to any holder of a Security that is, was or becomes a
named Trustee of the Trust. Such counsel may note that the holders of the
Securities may be required to make payment or provide indemnity or security
as set forth in the Trust Agreement.
(vi) The issuance and sale by the Trust of the Securities and the
Common Securities, the execution, delivery and performance by the Trust of
the Agreement, the consummation by the Trust of the transactions
contemplated therein and the compliance by the Trust with its obligations
thereunder do not violate (a) any of the provisions of the Certificate of
Trust of the Trust or the Trust Agreement or (b) any applicable Delaware
law or Delaware administrative regulation.
(vii) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets, activities
(other than having a Delaware trustee as required by the Delaware Business
Trust Act and the filing of documents with the Secretary of State of the
State of Delaware) or employees in the State of Delaware, no authorization,
approval, consent or order of any Delaware court or Delaware governmental
authority or Delaware agency is required to be obtained by the Trust solely
as a result of the issuance and sale of the Securities, the consummation by
the Trust of the transactions contemplated herein or the compliance by the
Trust of its obligations hereunder, except such as have been obtained and
such as may be required by the securities laws of the State of Delaware (as
to which such counsel need express no opinion);
(viii) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets, activities
(other than having a Delaware trustee as required by the Delaware Business
Trust Act and the filing of documents with the Secretary of State of the
State of Delaware) or employees in the State of Delaware, and assuming that
the Trust is treated as a grantor trust for federal income tax purposes and
that the holders of the Securities are viewed for federal income tax
purposes as owners of either all of, or their liquidation and accrued but
unpaid share of, the Corresponding Subordinated Debt Securities held by the
Trust, the Securityholders (other than those holders of the Securities, or
persons who are partners or S corporation shareholders for federal income
tax purposes in such holders of Securities, who reside or are domiciled in
the State of Delaware or who are otherwise subject to income taxation in
the State of Delaware) will have no liability for income taxes imposed by
the State of Delaware solely as a result of their participation in the
Trust, and the Trust will not be liable for any income tax imposed by the
State of Delaware (in rendering the opinion expressed in this paragraph
(viii),
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<PAGE>
such counsel need express no opinion concerning the securities laws of the
State of Delaware).
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<PAGE>
Annex A
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)
We are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations
(i) in our opinion, the audited financial statements and the related
financial statement schedules included or incorporated by reference in the
Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
the published rules and regulations thereunder; [ ]
(ii) on the basis of procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of the
unaudited interim consolidated financial statements of the Company for the
three month periods ended ____________ and ____________ , the three and six
month periods ended ____________ and ____________ and the three and nine
month periods ended ____________ and ____________, included or incorporated
by reference in the Registration Statement and the Prospectus
(collectively, the "10-Q Financials") , a reading of the unaudited interim
consolidated financial statements of the Company for the _____-month
periods ended ____________ and ____________, included in the Registration
Statement and the Prospectus (the "____-month financials") , a reading of
the latest available unaudited interim consolidated financial statements of
the Company, a reading of the minutes of all meetings of the stockholders
and directors of the Company and its subsidiaries and the ____________ and
____________ Committees of the Company's Board of Directors and any
subsidiary committees since day after end of last audited period, inquiries
of certain officials of the Company and its subsidiaries responsible for
financial and accounting matters, a review of interim financial information
in accordance with standards established by the American Institute of
Certified Public Accountants in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"), with respect to the description
of relevant periods and such other inquiries and procedures as may be
specified in such letter, nothing came to our attention that caused us to
believe that:
(A) the 10-Q Financials incorporated by reference in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the 1934 Act and the 1934 Act Regulations applicable to unaudited
financial statements included in Form 10-Q or any material
modifications should be made to the 10-Q Financials incorporated by
reference in the Registration Statement and the Prospectus for them to
be in conformity with generally accepted accounting principles;
(B) the _____-month financials included in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with
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the applicable accounting requirements of the 1933 Act and the 1933
Act Regulations applicable to unaudited interim financial statements
included in registration statements or any material modifications
should be made to the _____-month financials included in the
Registration Statement and the Prospectus for them to be in conformity
with generally accepted accounting principles;
(C) at ____________ and at a specified date not more than five
days prior to the date of this Agreement, there was any change in the
Shareholders' Equity of the Company and its subsidiaries or any
decrease in the Total Current Assets of the Company and its
subsidiaries or any increase in the Long -term Debt of the Company and
its subsidiaries, in each case as compared with amounts shown in the
latest balance sheet included in the Registration Statement, except in
each case for changes, decreases or increases that the Registration
Statement discloses have occurred or may occur; or
(D) for the period from ____________ to ____________ and for the
period from ____________ to a specified date not more than five days
prior to the date of this Agreement, there was any decrease in Net
Sales, Earnings Before Extraordinary Loss or Net Earnings, in each
case as compared with the comparable period in the preceding year,
except in each case for any decreases that the Registration Statement
discloses have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above and a
reading of the Selected Financial Data included in the Registration
Statement and a reading of the financial statements from which such data
were derived, nothing came to our attention that caused us to believe that
the Selected Financial Data included in the Registration Statement do not
comply as to form in all material respects with the disclosure requirements
of Item 301 of Regulation S-K, that the amounts included in the Selected
Financial Data are not in agreement with the corresponding amounts in the
audited consolidated financial statements for the respective periods or
that the financial statements not included in the Registration Statement
from which certain of such data were derived are not in conformity with
generally accepted accounting principles;
(iv) we have compared the information in the Registration Statement
under selected captions with the disclosure requirements of Regulation S-K
and, on the basis of limited procedures specified herein, nothing came to
our attention that caused us to believe that this information does not
comply as to form in all material respects with the disclosure requirements
of Items 302, 402 and 503(d), respectively, of Regulation S-K;
(v) based upon the procedures set forth in clause (ii) above, a
reading of the unaudited financial statements of the Company for the most
recent period that
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have not been included in the Registration Statement and a review of such
financial statements in accordance with SAS No. 71, nothing came to our
attention that caused us to believe that the unaudited amounts for Net
Sales, Net Earnings or Shareholders' Equity for the most recent period do
not agree with the amounts set forth in the unaudited consolidated
financial statements for those periods or that such unaudited amounts were
not determined on a basis substantially consistent with that of the
corresponding amounts in the audited consolidated financial statements;
[(vi) we are unable to and do not express any opinion on the Pro
Forma Combining Statement of Operations (the "Pro Forma Statement")
included in the Registration Statement or on the pro forma adjustments
applied to the historical amounts included in the Pro Forma Statement;
however, for purposes of this letter we have:
(A) read the Pro Forma Statement;
(B) performed a review in accordance with SAS No. 71 of the financial
statements to which the pro forma adjustments were applied;
(C) made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters about the basis for
their determination of the pro forma adjustments and whether the Pro Forma
Statement complies as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X;
(D) proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the Pro Forma Statement;
on the basis of such procedures and such other inquiries and procedures as
specified herein, nothing came to our attention that caused us to believe
that the Pro Forma Statement included in the Registration Statement does
not comply as to form in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements;] and
(vii) in addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which are specified
herein, and have compared certain of such items with, and have found such
items to be in agreement with, the accounting and financial records of the
Company.
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