UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
Commission Registrant; State of Incorporation IRS Employer
File Number Address; and Telephone Number Identification No.
----------- ---------------------------------- ------------------
001-09057 WISCONSIN ENERGY CORPORATION 39-1391525
(A Wisconsin Corporation)
231 West Michigan Street
P.O. Box 2949
Milwaukee, WI 53201
(414) 221-2345
001-01245 WISCONSIN ELECTRIC POWER COMPANY 39-0476280
(A Wisconsin Corporation)
231 West Michigan Street
P.O. Box 2046
Milwaukee, WI 53201
(414) 221-2345
Indicate by check mark whether each Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that each Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date (May 5, 2000):
Wisconsin Energy Corporation Common Stock, $.01 Par Value,
120,451,611 shares
outstanding.
Wisconsin Electric Power Company Common Stock, $10 Par Value,
33,289,327 shares outstanding.
Wisconsin Energy Corporation
is the sole holder of
Wisconsin Electric Power
Company Common Stock.
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
<S> <C>
Item Page
- - - - - - - - ---- ----
Introduction...............................................................
Part I - Financial Information
------------------------------
1. Financial Statements
Wisconsin Energy
Consolidated Condensed Income Statement................................
Consolidated Condensed Balance Sheet...................................
Consolidated Statement of Cash Flows...................................
Wisconsin Electric
Condensed Income Statement.............................................
Condensed Balance Sheet................................................
Statement of Cash Flows................................................
Notes to Financial Statement of
Wisconsin Energy and Wisconsin Electric................................
2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations for Wisconsin Energy and Wisconsin Electric................
3. Quantitative and Qualitative Disclosures About Market Risk.................
Part II - Other Information
---------------------------
1. Legal Proceedings..........................................................
6. Exhibits and Reports on Form 8-K...........................................
Signatures.................................................................
</TABLE>
INTRODUCTION
Wisconsin Energy Corporation ("Wisconsin Energy" or the
"Company") is a holding company whose principal subsidiary as of
March 31, 2000 is Wisconsin Electric Power Company ("Wisconsin
Electric"), an electric, gas and steam utility. Unless qualified
by its context when used in this combined Form 10-Q, Wisconsin
Energy refers to the holding company and all of its subsidiaries.
The unaudited interim financial statements presented in this
combined Form 10-Q report include the consolidated statements of
Wisconsin Energy as well as separate statements for Wisconsin
Electric. These unaudited statements have been prepared by
Wisconsin Energy and Wisconsin Electric pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Wisconsin Energy and
Wisconsin Electric financial statements should be read in
conjunction with the financial statements and notes thereto
included in the companies' combined Annual Report on Form 10-K
for the year ended December 31, 1999. This combined Form 10-Q is
separately filed by Wisconsin Energy and Wisconsin Electric.
Information contained herein relating to any individual
registrant is filed by such registrant on its own behalf.
PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- ---------
(Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C>
Operating Revenues $627,750 $556,717
Operating Expenses
Fuel 94,553 70,735
Purchased power 65,779 49,660
Cost of gas sold 69,292 68,860
Other operation and maintenance 185,140 182,466
Depreciation and amortization 103,660 66,956
Property and revenue tax 20,727 17,724
-------- --------
Total Operating Expenses 539,151 456,401
-------- --------
Pretax Operating Income 88,599 100,316
Other Income and Deductions
Interest income 6,789 8,349
Allowance for other funds
used during construction 862 984
Other 29,741 4,446
-------- --------
Total Other Income and Deductions 37,392 13,779
Interest Charges and Other
Interest expense 42,543 33,566
Allowance for borrowed funds
used during construction (3,099) (1,900)
Distributions on preferred
securities of subsidiary trust 3,425 228
Preferred dividend
requirement of subsidiary 301 301
-------- --------
Total Interest Charges and Other 43,170 32,195
-------- --------
Income Before Income Taxes 82,821 81,900
Income Taxes 32,227 28,389
-------- --------
Net Income $50,594 $53,511
======== ========
Average Number of Shares of Common
Stock Outstanding (Thousands) 119,512 115,926
Earnings Per Share of Common
Stock (Basic and Diluted) $0.42 $0.46
Dividends Per Share of Common Stock $0.39 $0.39
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2000 December 31, 1999
-------------- -----------------
(Thousands of Dollars)
<S> <C> <C>
Assets
------
Property, Plant and Equipment
Electric utility $5,203,975 $5,153,388
Gas utility 557,212 552,405
Steam utility 63,935 63,461
Common utility 392,920 391,793
Energy non-utility 207,316 198,954
Other property 368,042 351,057
Accumulated provision for depreciation (3,335,613) (3,249,978)
---------- ----------
3,457,787 3,461,080
Construction work in progress 223,168 174,778
Leased facilities - net 125,907 127,327
Nuclear fuel - net 82,850 83,393
---------- ----------
Net Property, Plant and Equipment 3,889,712 3,846,578
Investments 969,921 950,322
Current Assets
Cash and cash equivalents 24,746 73,477
Accounts receivable 271,529 242,348
Accrued utility revenues 94,636 134,566
Materials, supplies and fossil fuel 196,051 231,615
Prepayments and other assets 99,487 123,865
---------- ----------
Total Current Assets 686,449 805,871
Deferred Charges and Other Assets
Accumulated deferred income taxes 199,832 197,988
Other 452,102 432,361
---------- ----------
Total Deferred Charges and Other Assets 651,934 630,349
---------- ----------
Total Assets $6,198,016 $6,233,120
========== ==========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $862,627 $839,497
Retained earnings 1,174,830 1,170,765
Unearned compensation - restricted stock award (2,472) (2,518)
---------- ----------
Total Common Stock Equity 2,034,985 2,007,744
Preferred stock 30,450 30,450
Company-obligated, mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the Company 200,000 200,000
Long-term debt 2,135,505 2,134,636
---------- ----------
Total Capitalization 4,400,940 4,372,830
Current Liabilities
Long-term debt due currently 69,339 69,085
Short-term debt 370,285 507,500
Accounts payable 191,196 174,043
Accrued liabilities 151,469 99,666
Other 48,921 48,273
---------- ----------
Total Current Liabilities 831,210 898,567
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 624,325 624,864
Other 341,541 336,859
---------- ----------
Total Deferred Credits and Other Liabilities 965,866 961,723
---------- ----------
Total Capitalization and Liabilities $6,198,016 $6,233,120
========== ==========
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities
Net income $50,594 $53,511
Reconciliation to cash
Depreciation and amortization 103,660 66,956
Nuclear fuel expense - amortization 7,160 4,718
Conservation expense - amortization 1,407 5,625
Debt premium, discount
and expense - amortization 1,195 762
Deferred income taxes - net (2,501) (2,786)
Investment tax credit - net (1,143) (1,148)
Allowance for other funds
used during construction (862) (984)
Change in - Accounts receivable (29,181) (18,361)
Inventories 35,564 26,647
Other current assets 64,308 28,712
Accounts payable 17,153 (47,556)
Other current liabilities 52,451 58,283
Other (6,791) (21,683)
-------- --------
Cash Provided by Operating Activities 293,014 152,696
Investing Activities
Construction expenditures (134,963) (105,967)
Allowance for borrowed funds
used during construction (3,099) (1,900)
Nuclear fuel (10,594) (6,306)
Nuclear decommissioning trust (36,013) (8,163)
Other 3,547 (1,365)
-------- --------
Cash Used in Investing Activities (181,122) (123,701)
Financing Activities
Sale of - Common stock 23,130 18,711
Long-term debt 15,539 31,482
Mandatorily redeemable trust
preferred securities - 200,000
Retirement of long-term debt (15,548) (11,821)
Change in short-term debt (137,215) (119,919)
Dividends on stock - Common (46,529) (45,169)
-------- --------
Cash Provided by (Used in) Financing Activities (160,623) 73,284
-------- --------
Change in Cash and Cash Equivalents (48,731) 102,279
Cash and Cash Equivalents at Beginning of Period 73,477 16,603
-------- --------
Cash and Cash Equivalents at End of Period $24,746 $118,882
======== ========
Supplemental Information -
Cash Paid (Received) For
Interest (net of amount capitalized) $31,207 $25,425
Income taxes (25,855) 14,649
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELECTRIC POWER COMPANY
CONDENSED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31
---------------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues $540,778 $527,839
Operating Expenses
Fuel 75,272 70,735
Purchase power 30,105 31,053
Cost of gas sold 69,292 68,860
Other operation and maintenance 160,772 173,452
Depreciation and amortization 98,099 64,450
Property and revenue tax 17,445 16,831
-------- --------
Total Operating Expenses 450,985 425,381
-------- --------
Pretax Operating Income 89,793 102,458
Other Income and Deductions
Interest income 3,047 5,672
Allowance for other funds
used during construction 862 984
Other 31,213 5,524
-------- --------
Total Other Income and Deductions 35,122 12,180
Interest Charges
Interest expense 29,248 28,397
Allowance for borrowed funds
used during construction (423) (481)
-------- --------
Total Interest Charges 28,825 27,916
-------- --------
Income Before Income Taxes 96,090 86,722
Income Taxes 37,251 30,761
-------- --------
Net Income 58,839 55,961
Preferred Stock Dividend Requirement 301 301
-------- --------
Earnings Available for Common
Stockholder $58,538 $55,660
======== ========
<FN>
Note: Earnings and dividends per share of common stock are not applicable because all of
Wisconsin Electric Power Company's common stock is owned by Wisconsin Energy
Corporation.
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELECTRIC POWER COMPANY
CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2000 December 31, 1999
-------------- -----------------
(Thousands of Dollars)
<S> <C> <C>
Assets
------
Property, Plant and Equipment
Electric utility $5,120,834 $5,070,246
Gas utility 557,212 552,405
Steam utility 63,935 63,461
Common utility 392,920 391,793
Other property 7,778 7,581
Accumulated provision for depreciation (3,270,544) (3,189,890)
---------- ----------
2,872,135 2,895,596
Construction work in progress 122,876 99,002
Leased facilities - net 125,907 127,327
Nuclear fuel - net 82,850 83,393
---------- ----------
Net Property, Plant and Equipment 3,203,768 3,205,318
Investments 689,233 663,776
Current Assets
Cash and cash equivalents 6,859 49,852
Accounts receivable 180,467 166,651
Accrued utility revenues 93,654 133,422
Materials, supplies and fossil fuel 167,473 197,221
Prepayments and other assets 63,694 98,802
---------- ----------
Total Current Assets 512,147 645,948
Deferred Charges and Other Assets
Accumulated deferred income taxes 189,997 188,192
Other 363,561 349,369
---------- ----------
Total Deferred Charges and Other Assets 553,558 537,561
---------- ----------
Total Assets $4,958,706 $5,052,603
========== ==========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $863,582 $863,582
Retained earnings 1,030,916 1,017,271
---------- ----------
Total Common Stock Equity 1,894,498 1,880,853
Preferred stock 30,450 30,450
Long-term debt 1,671,662 1,677,610
---------- ----------
Total Capitalization 3,596,610 3,588,913
Current Liabilities
Long-term debt due currently 30,297 30,822
Short-term debt 117,088 264,664
Accounts payable 123,068 127,108
Accrued liabilities 134,502 86,089
Other 43,341 39,677
---------- ----------
Total Current Liabilities 448,296 548,360
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 609,505 610,040
Other 304,295 305,290
---------- ----------
Total Deferred Credits and Other Liabilities 913,800 915,330
---------- ----------
Total Capitalization and Liabilities $4,958,706 $5,052,603
========== ==========
<FN>
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELCETRIC POWER COMPANY
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities
Net income $58,839 $55,961
Reconciliation to cash
Depreciation and amortization 98,099 64,450
Nuclear fuel expense - amortization 7,160 4,718
Conservation expense - amortization 1,407 5,625
Debt premium, discount
and expense - amortization 734 656
Deferred income taxes - net (2,509) (2,794)
Investment tax credit - net (1,127) (1,132)
Allowance for other funds used
during construction (862) (984)
Change in - Accounts receivable (13,816) (22,756)
Inventories 29,748 26,649
Other current assets 74,876 32,093
Accounts payable (4,040) (42,409)
Other current liabilities 52,077 59,019
Other (5,607) (9,974)
-------- --------
Cash Provided by Operating Activities 294,979 169,122
Investing Activities
Construction expenditures (86,980) (81,432)
Allowance for borrowed funds used
during construction (423) (481)
Nuclear fuel (10,594) (6,306)
Nuclear decommissioning trust (36,013) (8,163)
Other (3,644) (4,283)
-------- --------
Cash Used in Investing Activities (137,654) (100,665)
Financing Activities
Sale of long-term debt - 29,444
Retirement of long-term debt (7,548) (7,247)
Change in short-term debt (147,576) (52,819)
Dividends on stock - Common (44,893) (44,893)
Preferred (301) (301)
-------- --------
Cash Used in Financing Activities (200,318) (75,816)
-------- --------
Change in Cash and Cash Equivalents (42,993) (7,359)
Cash and Cash Equivalents at Beginning of Period 49,852 14,183
-------- --------
Cash and Cash Equivalents at End of Period $6,859 $6,824
======== ========
Supplemental Information -
Cash Paid (Received) For
Interest (net of amount capitalized) $25,412 $26,069
Income taxes (26,013) 11,334
<FN>
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
WISCONSIN ENERGY CORPORATION
WISCONSIN ELECTRIC POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated financial statements
for Wisconsin Energy Corporation and the unaudited financial
statements for Wisconsin Electric Power Company should be read in
conjunction with the companies' combined 1999 Annual Report on
Form 10-K. In the opinion of management, all adjustments, normal
and recurring in nature, necessary to a fair statement of the
results of operations and financial position of Wisconsin Energy
and Wisconsin Electric, have been included in the accompanying
income statements and balance sheets. The results of operations
for the three months ended March 31, 2000 are not necessarily
indicative, however, of the results which may be expected for the
year 2000 because of seasonal and other factors.
2. Due primarily to acquisitions during 1999 by Wisconsin Energy
that increased the size of Wisconsin Energy's non-utility
operations and assets, Wisconsin Energy and Wisconsin Electric
modified their income statement and balance sheet presentations
effective with the second quarter of 1999. Prior year financial
statements have been reclassified to reflect the new
presentation.
3. On April 26, 2000, Wisconsin Energy acquired WICOR, Inc.
(with its subsidiaries, "WICOR") through the merger of an
acquisition subsidiary of Wisconsin Energy into WICOR in which
each outstanding share of WICOR common stock (except shares of
restricted stock) was converted into the right to receive $31.50
in cash. WICOR is a diversified holding company with two
principal business groups: energy services and pump
manufacturing. The business combination was effected through the
payment of approximately $1.2 billion in cash, including related
fees and expenses. Approximately $300 million of WICOR debt
remained outstanding following the acquisition. In addition,
WICOR's unexercised equity-based compensation awards outstanding
at the effective time of the merger were converted into 57,745
shares of restricted Wisconsin Energy common stock, into options
for up to 4,619,969 shares of Wisconsin Energy common stock with
a weighted average exercise price of $13.691 per share, and into
deferred stock units payable in 105,520 shares of Wisconsin
Energy common stock. The acquisition was funded through the
issuance of commercial paper in the institutional private
placement market and will be accounted for as a purchase.
Accordingly, the purchase price will be allocated to the acquired
assets and assumed liabilities based upon their fair value, and
the estimated total cost in excess of net assets will be
reflected as goodwill and amortized over 40 years. The
consolidated financial statements of the Company will reflect
the business combination and WICOR's financial results from and
after the date of acquisition.
For additional information related to the acquisition of
WICOR, see Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - "Factors
Affecting Results of Operations" and "Liquidity and Capital
Resources" in Part I of this report.
4. During the first three months of 2000, Wispark Corporation, a
wholly-owned subsidiary of Wisconsin Energy, secured
$15.5 million of bank financing in the form of adjustable rate
mortgage notes due 2000-2003 to finance the construction or
purchase of various facilities.
5. WISCONSIN ENERGY: Wisconsin Energy, a holding company with
subsidiaries in utility and non-utility businesses, has two
reportable operating segments: a utility energy and a non-utility
energy segment.
The reportable utility energy segment includes Wisconsin
Energy's two utility subsidiaries, Wisconsin Electric Power
Company and Edison Sault Electric Company. This segment
derives its revenues from electric, gas and steam operations.
Electric operations engage in the generation, transmission,
distribution and sale of electric energy in southeastern
(including Metropolitan Milwaukee), east central and northern
Wisconsin and in the Upper Peninsula of Michigan. Gas
operations engage in the purchase, distribution and sale of
natural gas to retail customers and the transportation of
customer-owned gas in four service areas in southeastern,
east central, western and northern Wisconsin. Steam
operations engage in the production, distribution and sale of
steam to space heating and processing customers in the
Milwaukee, Wisconsin area.
The reportable non-utility energy segment derives its
revenues primarily from energy activities including
independent power production and energy marketing, services
and trading.
The following table summarizes the reportable operating
segments of Wisconsin Energy for the three month periods
ended March 31.
<TABLE>
<CAPTION>
Energy
---------------------------------------
Wisconsin Energy
Corporation Utility Non-Utility Subtotal Other (a) Total
- - - - - - - - ---------------- ----------- ----------- ---------- ----------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
March 31, 2000
--------------
Three Months Ended
Operating Revenues $549,722 $69,073 $618,795 $8,955 $627,750
Pretax Operating
Income (Loss) (b) 91,400 (1,898) 89,502 (903) 88,599
March 31, 1999
--------------
Three Months Ended
Operating Revenues $536,720 $14,039 $550,759 $5,958 $556,717
Pretax Operating
Income (Loss) (b) 104,316 (3,981) 100,335 (19) 100,316
<FN>
(a) Other includes non-utility real estate investment and development and non-utility
investments in recycling technology.
(b) Interest income and interest expense are not included in segment pretax operating
income.
</FN>
</TABLE>
WISCONSIN ELECTRIC: Wisconsin Electric, Wisconsin Energy's
principal subsidiary, has organized its operating segments
according to how it is currently regulated. Wisconsin
Electric's reportable operating segments include electric,
gas and steam utility segments. The following table
summarizes the reportable operating segments of Wisconsin
Electric for the three month periods ended March 31.
<TABLE>
<CAPTION>
Wisconsin Electric
Power Company Electric Gas Steam Total
- - - - - - - - ------------------ --------- --------- --------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
March 31, 2000
--------------
Three Months Ended
Operating Revenues (a) $414,890 $118,457 $7,431 $540,778
Pretax Operating
Income (b) 65,766 21,826 2,201 89,793
March 31, 1999
--------------
Three Months Ended
Operating Revenues (a) $397,674 $121,983 $8,182 $527,839
Pretax Operating
Income (b) 72,520 27,270 2,668 102,458
<FN>
(a) Wisconsin Electric accounts for intersegment revenues at tariff rates
established by the Public Service Commission of Wisconsin. Intersegment
revenues are not material.
(b) Interest income and interest expense are not included in segment pretax
operating income.
</FN>
</TABLE>
6. In July 1999, a jury decided against Wisconsin Electric and
awarded the plaintiffs $4.5 million as actual damages and
$100 million in punitive damages in a lawsuit alleging that
Wisconsin Electric had placed contaminated wastes at two sites in
the City of West Allis, Wisconsin. Wisconsin Electric is
preparing to file an appeal of the case. In December 1999, in
order to stop the post-judgment accrual of interest at 12% per
annum during the pendency of the appeal, Wisconsin Electric
tendered a contested liability payment of $110 million, which is
part of "Deferred Charges and Other Assets - Other" on the
condensed balance sheets, to the Clerk of Circuit Court for
Milwaukee County representing the amount of the verdict and
accrued interest. Under Wisconsin law, the plaintiffs are liable
to Wisconsin Electric upon reversal or reduction of the judgment
for the applicable amount of the funds tendered with interest.
In further post-trial proceedings, the plaintiffs filed with
the Milwaukee County Circuit Court a motion for sanctions
based upon representations made by Wisconsin Electric during
trial that Wisconsin Electric had no insurance coverage for
the punitive damage award. On April 27, 2000, the Circuit
Court Judge issued a ruling on the matter, imposing the
following sanctions against Wisconsin Electric: (i) "judgment
in the alternative" as a sanction, thereby finding an
alternative basis upon which to sustain the $104.5 million
verdict returned by the jury; (ii) a bar against Wisconsin
Electric pursuing insurance coverage for the punitive damage
portion of the verdict; and (iii) a requirement that
Wisconsin Electric pay the plaintiffs' costs relating to the
sanctions matter. In addition to its appeal of the judgment
entered on the jury's verdict, Wisconsin Electric will also
appeal the Judge's ruling on the sanctions matter.
In the opinion of management, based in part on the advice of
legal counsel, the jury verdict was not supported by the
evidence or the law and the unprecedented award of punitive
damages of this magnitude was unwarranted and should
therefore be reversed or substantially reduced on appeal.
Management also believes that the sanctions imposed by the
Judge were not supported by the evidence or the law. As
such, Wisconsin Electric has not established a reserve for
potential damages from this suit. For further information,
see Item 1. Legal Proceedings - "Environmental Matters" in
Part II of this report.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Wisconsin Energy Corporation is a holding company whose principal
subsidiary as of March 31, 2000 is Wisconsin Electric Power
Company, an electric, gas and steam utility. Unless qualified by
their context when used in this document, the terms "Wisconsin
Energy" or the "Company" refer to the holding company and all of
its subsidiaries. During the first three months of 2000,
approximately 86% of Wisconsin Energy's consolidated operating
revenues and 101% of Wisconsin Energy's consolidated pretax
operating income were attributable to Wisconsin Electric. As of
March 31, 2000, approximately 80% of Wisconsin Energy's
consolidated total assets were attributable to Wisconsin
Electric. The following discussion and analysis of financial
condition and results of operations includes both Wisconsin
Energy and Wisconsin Electric unless otherwise stated.
See Note 2 above in Item 1. Financial Statements - "Notes to
Financial Statements" for information concerning the
reclassification of certain prior year amounts in the condensed
financial statements. See Note 3 above in Item 1. Financial
Statements - "Notes to Financial Statements" and "Factors
Affecting Results of Operations" below for information concerning
Wisconsin Energy's April 26, 2000 acquisition of WICOR, Inc.
Because this business combination will be accounted for as a
purchase and, therefore, reflected prospectively in Wisconsin
Energy's consolidated financial statements from and after the
date of the acquisition, the analysis of "Results of Operations"
below does not consider the historical operations of WICOR.
CAUTIONARY FACTORS: A number of forward-looking statements are
included in this document. When used, the terms "anticipate,"
"believe," "estimate," "expect," "objective," "plan," "possible,"
"potential," "project" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements
are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from those that
are described, including the factors that are noted in "Factors
Affecting Results of Operations" and "Cautionary Factors" below.
RESULTS OF OPERATIONS - 2000 FIRST QUARTER
EARNINGS
During the first quarter of 2000, Wisconsin Energy's consolidated
net income and earnings per share of common stock decreased to
$50.6 million and $0.42 per share, respectively, compared with
$53.5 million and $0.46 per share, respectively, during the first
quarter of 1999. For the same periods, Wisconsin Electric's
earnings increased to $58.5 million during 2000 compared with
$55.7 million during 1999.
Between the comparative periods, a modest increase in earnings
from Wisconsin Energy's utility operations, including Wisconsin
Electric, was insufficient to offset higher net losses by
Wisconsin Energy's non-utility operations, resulting in the
decline in Wisconsin Energy's consolidated earnings. A decrease
in gas utility gross margin due to unusually warm winter weather
during the first quarter of 2000 limited the growth in earnings
from utility operations. Scheduled outages at two fossil-fueled
non-utility power plants in the state of Connecticut limited
their contribution to non-utility earnings during the first
quarter of 2000. As a result, net losses from non-utility
operations increased during the first quarter of 2000 due to
higher costs associated with financing acquisition of these two
non-utility power plants in mid-April 1999 and, to a lesser
extent, associated with the financing of other non-utility
acquisitions made within the past year.
The following table summarizes contributions to Wisconsin
Energy's consolidated earnings per share (basic and diluted) by
business segment during the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
Earnings Per Share (basic & diluted)-
Wisconsin Energy 2000 1999 % Change
- - - - - - - - ------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Utility Operations $0.50 $0.49 2.0%
Non-Utility Operations
Energy (0.04) (0.03) (33.3%)
Other (0.04) 0.00 -
----- -----
Total $0.42 $0.46 (8.7%)
===== =====
</TABLE>
An analysis of the Company's utility and non-utility pretax
operating income as well as an analysis of other income and
expense items follows.
UTILITY PRETAX OPERATING INCOME
During the first quarter of 2000, Wisconsin Energy's utility
pretax operating income decreased by $12.9 million or 12.4% and
Wisconsin Electric's pretax operating income decreased by
$12.7 million or 12.4% when compared to the first quarter of
1999. For both Wisconsin Energy and Wisconsin Electric, the
positive effects of higher electric utility gross margins due to
increased electric energy sales and of lower other operation and
maintenance expenses during the first quarter of 2000 were more
than offset by the effects of a weather-related decrease in gas
utility gross margin and significantly higher depreciation and
amortization expenses.
The increase in depreciation and amortization expenses during the
first quarter of 2000 was primarily due to higher nuclear
decommissioning expenses at Wisconsin Electric. Nuclear
decommissioning expenses consist of payments to and earnings of
the nuclear decommissioning trust fund. While payments to the
nuclear decommissioning trust fund were unchanged between the
comparative periods, earnings from nuclear decommissioning trust
fund investments, consisting of interest and dividends from as
well as gains on the investments, increased by $27.9 million.
Because earnings from nuclear trust fund investments are also
recognized in "Other Income and Deductions" on the condensed
income statements, they are earnings neutral to Wisconsin
Electric and to Wisconsin Energy. Excluding the effect of
Wisconsin Electric's nuclear decommissioning trust fund earnings
on depreciation and amortization expenses, Wisconsin Energy's
utility pretax operating income grew by $15.0 million and
Wisconsin Electric's pretax operating income grew by
$15.2 million between the comparative periods.
Electric Utility Revenues, Gross Margins and Sales
WISCONSIN ENERGY: Primarily due to higher total electric
utility energy sales during the first quarter of 2000, Wisconsin
Energy's total electric operating revenues increased by
$17.3 million or 4.3% compared to the first quarter of 1999 and
gross margin on electric operating revenues (electric operating
revenues less fuel and purchased power expenses) increased by
$13.3 million or 4.4%.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Energy 2000 1999 % Change
- - - - - - - - ------------------------------ --------- -------- --------
<S> <C> <C> <C>
Electric Gross Margin ($000)
Electric Operating Revenues $423,834 $406,555 4.3%
Fuel & Purchased Power 109,687 105,720 3.8%
-------- --------
Gross Margin $314,147 $300,835 4.4%
======== ========
Total Electric Sales
(Megawatt-hours) 7,789,891 7,393,205 5.4%
</TABLE>
Further detail about Wisconsin Electric's contributions to
Wisconsin Energy's electric utility revenues, gross margins and
energy sales follows.
WISCONSIN ELECTRIC: During the first quarter of 2000, Wisconsin
Electric's total electric operating revenues increased by
$17.2 million or 4.3% compared to the first quarter of 1999 and
gross margin on electric operating revenues increased by
$13.6 million or 4.6%. Wisconsin Electric attributes this growth
in large part to higher total electric energy sales during 2000.
Gross margin on electric operating revenues also increased due to
a lower cost mix of fuel and purchased power used to meet
electric demand during the first quarter of 2000.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- - - - - - - - ------------------------------ -------- -------- --------
<S> <C> <C> <C>
Electric Gross Margin ($000)
Electric Operating Revenues $414,890 $397,674 4.3%
Fuel & Purchased Power 105,377 101,788 3.5%
-------- --------
Gross Margin $309,513 $295,886 4.6%
======== ========
</TABLE>
As a result of the higher total electric energy sales during the
first quarter of 2000 noted above, Wisconsin Electric's total
fuel and purchased power expenses increased by $3.6 million or
3.5% between the comparative periods. However, due to higher
availability of low cost generation from Point Beach Nuclear
Plant during the first quarter of 2000, the rate of increase in
total fuel and purchased power expenses was less than the rate of
increase in total electric energy sales as well as in total
electric operating revenues, contributing to the growth in gross
margin on electric operating revenues. During the first quarter
of 2000, Wisconsin Electric obtained 25% of its electric energy
supply from nuclear generation compared to 17% during the first
quarter of 1999.
Wisconsin Electric's total electric energy sales grew by 5.5%
between the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- - - - - - - - ------------------------------ --------- --------- --------
<S> <C> <C> <C>
Electric Sales (Megawatt-hours)
Residential 1,850,412 1,792,252 3.2%
Small Commercial/Industrial 1,986,716 1,948,435 2.0%
Large Commercial/Industrial 2,813,349 2,760,640 1.9%
Other-Retail/Municipal 363,924 309,240 17.7%
Resale-Utilities 606,810 415,499 46.0%
--------- ---------
Total Electric Sales 7,621,211 7,226,066 5.5%
========= =========
</TABLE>
Compared to the first quarter of 1999, electric energy sales at
Wisconsin Electric increased during the first quarter of 2000
primarily due to higher use per customer unrelated to weather.
Growth in the average number of customers between the comparative
periods in the residential, small commercial/industrial and other
retail/municipal customer classes also contributed to the
increase in electric energy sales. Sales to the Empire and
Tilden iron ore mines, Wisconsin Electric's two largest electric
retail customers, decreased 2.5% during the first quarter of
2000. Excluding the Empire and Tilden iron ore mines, total
electric energy sales between the comparative periods grew by
6.2% and sales to the remaining large commercial/industrial
customers grew by 3.2%. Sales for resale to other utilities
increased by 46.0% primarily due to higher opportunity sales
during the first quarter of 2000.
Gas Utility Revenues, Gross Margins and Therm Deliveries
Primarily due to a weather-related decrease in higher margin
residential and commercial/industrial retail gas sales during the
first quarter of 2000, Wisconsin Electric's gross margin on gas
operating revenues (gas operating revenues less cost of gas sold)
declined by $4.0 million or 7.5% compared to the first quarter of
1999.
<TABLE>
<CAPTION>
Three Months Ended March 31
Gas Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- - - - - - - - ------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Gross Margin ($000)
Gas Operating Revenues $118,457 $121,983 (2.9%)
Cost of Gas Sold 69,292 68,860 0.6%
-------- --------
Gross Margin $49,165 $53,123 (7.5%)
======== ========
</TABLE>
Between the comparative periods, Wisconsin Electric's total
natural gas therm deliveries fell by 5.1% and total retail gas
sales fell by 9.2% due in large part to an 8.0% decrease in
retail gas sales to residential customers and a 9.3% decrease in
retail gas sales to commercial/industrial customers. Weather
sensitive residential and commercial/industrial retail sales
declined due to significantly warmer weather during the first
three months of 2000. As measured by heating degree days, the
first quarter of 2000 was 9.4% warmer than the first quarter of
1999 and 13.1% warmer than normal.
<TABLE>
<CAPTION>
Three Months Ended March 31
Gas Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- - - - - - - - ------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Deliveries (000's of Therms)
Residential 139,558 151,734 (8.0%)
Commercial/Industrial 85,437 94,233 (9.3%)
Interruptible 4,187 6,613 (36.7%)
Interdepartmental 246 192 28.1%
------- -------
Total Retail Gas Sales 229,428 252,772 (9.2%)
Transported Customer - Owned Gas 109,136 108,200 0.9%
Transported - Interdepartmental 8,090 4,294 88.4%
------- -------
Total Gas Deliveries 346,654 365,266 (5.1%)
======= =======
</TABLE>
Utility Operating Expenses
OTHER OPERATION AND MAINTENANCE: Compared to the first quarter
of 1999, other operation and maintenance expenses in Wisconsin
Energy's utility business segment decreased by $12.8 million or
7.2% during the first quarter of 2000, with most of the decrease
attributable to Wisconsin Electric.
At Wisconsin Electric, the most significant changes in other
operation and maintenance expenses between the comparative
periods include a $12.0 million decline in nuclear non-fuel
expenses, a $4.0 million decline in customer account expenses and
a $3.8 million decline in customer service expenses, offset in
part by a $2.5 million increase in steam power generation
expenses, a $2.5 million increase in administrative and general
expenses and a $1.3 million increase in electric transmission
expenses.
Nuclear non-fuel expenses declined during 2000 as a result of
continued progress on various performance improvement
initiatives. During the same period, customer account expenses
declined primarily due to lower bad debt expenses and customer
service expenses declined primarily due to a change in the period
over which conservation investments are being amortized.
Between the comparative periods, steam power generation expenses
increased primarily due to a scheduled four week outage at
Wisconsin Electric's Pleasant Prairie Power Plant during the
first quarter of 2000. During the same periods, administrative
and general expenses grew in large part due to higher salary and
benefit costs incurred, and electric transmission expenses grew
primarily due to higher transmission line and transmission right
of way maintenance activities during the first quarter of 2000.
DEPRECIATION AND AMORTIZATION: During the first quarter of
2000, Wisconsin Energy's total utility depreciation and
amortization expense increased by $33.7 million compared to the
first quarter of 1999, while Wisconsin Electric's total
depreciation and amortization expense increased by $33.6 million.
Between the comparative periods, total utility depreciation and
amortization grew at both companies primarily due to the higher
nuclear decommissioning expenses at Wisconsin Electric noted
above. Also contributing to the growth in total depreciation and
amortization expenses, at the end of 1999 Wisconsin Electric
completed amortizing a credit to depreciation for pre-1991
contributions in aid of construction. During the first quarter
of 1999, depreciation expense was reduced by $5.7 million as a
result of this credit.
NON-UTILITY PRETAX OPERATING INCOME
Due to operation of the Bridgeport Harbor Station ("Bridgeport")
and the New Haven Harbor Station ("New Haven") during the first
quarter of 2000, which were acquired by Wisvest-Connecticut, LLC
in mid-April 1999, Wisconsin Energy's non-utility pretax
operating loss decreased by $1.2 million or 30.0% during the
first quarter of 2000 compared to the first quarter of 1999. In
anticipation of the 2000 summer cooling season, however, the
Bridgeport and New Haven power plants, located in the State of
Connecticut, underwent scheduled outages during the first quarter
of 2000, limiting their contribution to pretax operating income.
Bridgeport has returned to service, but the outage for New Haven
is not expected to be completed until mid-May 2000, which will
also limit its contribution to pretax operating income during the
second quarter of 2000. Wisvest-Connecticut, LLC is a wholly-
owned non-utility energy subsidiary of Wisvest Corporation, which
is in turn a wholly-owned subsidiary of Wisconsin Energy.
The following table includes a summary of Wisconsin Energy's non-
utility pretax operating losses during the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
Non-Utility Operations ($000) 2000 1999 % Change
- - - - - - - - ----------------------------- -------- -------- --------
<S> <C> <C> <C>
Operating Revenues
Independent Power Production $31,784 $ - -
Energy Marketing, Trading
& Services 31,408 14,005 124.3%
Other 14,836 5,992 147.6%
------- -------
Total Operating Revenues 78,028 19,997 290.2%
Operating Expenses
Fuel and Purchased Power 50,645 14,675 245.1%
Other 30,184 9,322 223.8%
------- -------
Total Operating Expenses 80,829 23,997 236.8%
------- -------
Pretax Operating Loss ($2,801) ($4,000) 30.0%
======= =======
</TABLE>
NON-UTILITY OPERATING REVENUES: As a result of the power plant
acquisitions noted above, non-utility energy operations realized
$31.8 million of operating revenues during the first quarter of
2000 through the sale of 838,870 megawatt-hours of electric
energy by Wisvest-Connecticut, LLC. In addition, non-utility
energy operations increased its operating revenues by
$17.4 million or 124.3% between the first quarter of 2000 and the
first quarter of 1999 as a result of a growth in energy
marketing, trading and services activities. Between the
comparative periods, other non-utility operating revenues
increased by $8.8 million or 147.6%, including $5.8 million of
additional ancillary revenues from energy activities,
$1.9 million of additional rental income from real estate
activities and $1.1 million of additional operating revenues from
recycling activities.
NON-UTILITY OPERATING EXPENSES: During the first quarter of
2000, non-utility fuel and purchased power expenses increased by
$36.0 million or 245.1% when compared to the first quarter of
1999 due to independent power production activities that began in
mid-April 1999 by Wisvest-Connecticut, LLC and to a growth in
energy marketing, trading and services activities. Other
operating expenses grew by $20.9 million or 223.8% between the
comparative periods primarily due to operation of the Bridgeport
and New Haven Harbor Stations since mid-April 1999, and, to a
lesser extent, due to additional recycling activities.
OTHER ITEMS
OTHER INCOME AND DEDUCTIONS: Compared to the three months ended
March 31, 1999, Other Income and Deductions - Other increased by
$25.3 million at Wisconsin Energy and by $25.7 million at
Wisconsin Electric primarily due to higher gains on nuclear
decommissioning trust fund investments during the three months
ended March 31, 2000. As noted above, however, gains on nuclear
decommissioning trust fund investments are also recognized as a
corresponding charge to depreciation expense on the condensed
income statements and are earnings neutral.
INTEREST CHARGES AND OTHER: Wisconsin Energy's total interest
expense grew by $9.0 million between the comparative periods of
which $8.2 million was attributable to non-utility operations.
Non-utility distributions on trust preferred securities also
increased by $3.2 million during the first quarter of 2000.
These higher costs are associated primarily with financing
Wisvest-Connecticut, LLC's acquisition of the Bridgeport Harbor
Station and the New Haven Harbor Station in mid-April 1999 and,
to a lesser extent, with additional outside financing required
for increased non-utility real estate activities during the past
year.
INCOME TAXES: Compared to the first quarter of 1999, Wisconsin
Energy's income taxes increased by approximately $3.8 million and
Wisconsin Electric's income taxes increased by $6.5 million due
to increased taxable income at Wisconsin Electric during the
first quarter of 2000.
FACTORS AFFECTING RESULTS OF OPERATIONS
ACQUISITION OF WICOR, INC.
On April 26, 2000, Wisconsin Energy acquired WICOR, Inc. through
a subsidiary merger involving the payment of approximately
$1.2 billion in cash, including related fees and expenses, for
all outstanding shares of WICOR common stock (except for shares
of restricted stock). Approximately $300 million of WICOR debt
remained outstanding following the acquisition. The business
combination, which was funded through the issuance of commercial
paper, will be accounted for as a purchase prospectively from the
date of acquisition. As a result, Wisconsin Energy anticipates
that it will incur significant increases in interest expense and
goodwill amortization expense in its results of operations during
the remainder of 2000.
WICOR is a diversified holding company with two principal
business groups: energy services and pump manufacturing.
Wisconsin Energy is undertaking a thorough review of WICOR's
operations and studying the manner in which the operations of the
two companies can best be optimized and intends to take such
actions as a result of this review as may be deemed appropriate
under the circumstances. Wisconsin Energy currently intends to
continue the primary business operations of WICOR and to continue
to use the physical assets of such primary business operations
for that purpose, while integrating such operations with its own.
As provided by the merger agreement, effective with the merger,
George E. Wardeberg, the Chairman and Chief Executive Officer of
WICOR, was elected as a director and appointed as Vice Chairman
of the Board of Directors of Wisconsin Energy. Willie D. Davis,
an outside director of WICOR, was also elected to the Wisconsin
Energy Board of Directors.
For additional information related to the acquisition of WICOR,
see "Liquidity and Capital Resources" below as well as Item 1.
Financial Statements - "Notes to Financial Statements" in Part I
of this report.
NUCLEAR MATTERS
SPENT FUEL STORAGE AND DISPOSAL: As a result of implementation
of extended fuel cycles, three remaining casks originally
authorized for temporary dry storage of spent fuel by the Public
Service Commission of Wisconsin and remaining space in the spent
fuel pool, Wisconsin Electric currently estimates that it has
sufficient temporary spent fuel storage capacity to continue
operating Point Beach Nuclear Plant until the spring of 2005. On
May 2, 2000, Wisconsin Electric applied to the Public Service
Commission of Wisconsin for authority to obtain and load enough
additional casks to hold all spent fuel from Point Beach during
the remainder of the plant's current licensed life. The current
United States Nuclear Regulatory Commission operating licenses
for Point Beach expire in October 2010 for Unit 1 and in March
2013 for Unit 2.
LEGAL MATTERS
GIDDINGS & LEWIS INC. / CITY OF WEST ALLIS LAWSUIT: See Item 1.
Legal Proceedings - "Environmental Matters" in Part II of this
report for information concerning a July 1999 jury verdict
against Wisconsin Electric awarding the plaintiffs $4.5 million
of actual damages and $100 million in punitive damages in a
lawsuit alleging that Wisconsin Electric had placed contaminated
wastes at two sites in the City of West Allis, Wisconsin.
ELECTRIC SYSTEM RELIABILITY MATTERS
300-MEGAWATT CONTRACT WITH SOUTHERN ENERGY: As previously
reported, Wisconsin Electric signed an eight year agreement in
August 1998 with Atlanta-based Southern Energy, Inc. to purchase
all of the electric output from Southern Energy's 300-megawatt
natural gas-fired peaking power plant in Neenah, Wisconsin. This
new facility began commercial operations on May 8, 2000.
INDUSTRY RESTRUCTURING AND COMPETITION
ELECTRIC UTILITY INDUSTRY RESTRUCTURING IN MICHIGAN: As
previously reported, the Michigan Legislature continues to
consider bills addressing retail access for customers of electric
service providers, and mitigation of market power, among other
subjects. To date, no bill has been passed by either legislative
chamber, and the prospects for passage of any bill during the
remainder of 2000 are uncertain.
RATES AND REGULATORY MATTERS
2000/2001 TEST YEARS: See Item 1. Legal Proceedings - "Rates
and Regulatory Matters" in Part II of this report for information
concerning an application that Wisconsin Electric filed with the
Public Service Commission of Wisconsin in September 1999
requesting incremental price relief for specific capital
investments and for a one-time accounting adjustment as well as a
related interim order received from the Public Service Commission
of Wisconsin in April 2000.
ENVIRONMENTAL MATTERS
NON-UTILITY AIR QUALITY MATTERS: As previously reported, the
Connecticut legislature was considering legislation that would
have imposed air quality restrictions on Wisvest-Connecticut,
LLC's Bridgeport Harbor Station and New Haven Harbor Station in
addition to those air quality restrictions required by current
federal and state law. On May 3, 2000, the Connecticut
legislature adjourned without enacting any legislation on this
subject, and is not expected to reconvene until 2001.
2000 OUTLOOK
EARNINGS: Wisconsin Energy currently projects that its 2000
earnings will be in the range of $1.65 to $1.85 per share. This
earnings projection includes or assumes, among other factors, the
effects of: unusually warm weather during the first quarter of
2000; goodwill amortization and interest charges associated with
the WICOR acquisition; modest synergy savings as a result of the
WICOR merger; the absence of WICOR's results from January through
April 26, 2000; and normal weather and operations of Wisconsin
Energy and all of its subsidiaries, including WICOR and its
subsidiaries, during the remainder of 2000. Subject to the many
variables which can affect such a projection, earnings in 2001
are expected to increase from these levels reflecting a full year
of earnings contributions from WICOR and attainment of a higher
level of merger-related savings.
These earnings projections are forward-looking statements subject
to certain risks, uncertainties and assumptions. Actual results
may vary materially. Factors that could cause actual results to
differ materially include, but are not limited to: general
economic conditions; business and competitive conditions in the
deregulating and consolidating energy industry, in general, and
in the Company's utility service territories; availability of the
Company's generating facilities; changes in purchased power costs
and supply availability; changes in natural gas prices and supply
availability; unusual weather; risks associated with non-utility
diversification; timely realization of anticipated net cost
savings from the WICOR merger; regulatory decisions; disposition
of legal proceedings; and foreign governmental, economic,
political and currency risk. See "Cautionary Factors" below.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES: Cash provided by operating activities
totaled $293.0 million at Wisconsin Energy and $295.0 million at
Wisconsin Electric during the first three months of 2000. This
compares to $152.7 million at Wisconsin Energy and $169.1 million
at Wisconsin Electric during the same period in 1999.
INVESTING ACTIVITIES: Net cash used in investing activities
totaled $181.1 million at Wisconsin Energy and $137.7 million at
Wisconsin Electric during the first three months of 2000 compared
to $123.7 million at Wisconsin Energy and $100.7 million at
Wisconsin Electric during the same period in 1999.
Wisconsin Energy's consolidated investing activities during the
first three months of 2000 included $135.0 million for the
acquisition or construction of new or improved facilities of
which $87.0 million was for a number of projects related to
utility plant at Wisconsin Electric, $26.3 million was for non-
utility real estate development activities by Wispark Corporation
and $17.7 million was for non-utility energy projects at Wisvest
Corporation. During 2000, Wisconsin Electric recorded
$36.0 million of payments to and earnings of the Nuclear
Decommissioning Trust Fund for the eventual decommissioning of
Point Beach Nuclear Plant and $10.6 million for the acquisition
of nuclear fuel.
FINANCING ACTIVITIES: During the first three months of 2000,
Wisconsin Energy used $160.6 million of net cash for financing
activities compared to receiving a net of $73.3 million during
the first three months of 1999. Wisconsin Electric used a net of
$200.3 million for financing activities during the first quarter
of 2000 compared to using a net of $75.8 million during the same
period in 1999.
During the first quarter of 2000, Wisconsin Energy issued
1,252,854 new shares of common stock which were purchased by
participants in the Company's stock plans with cash investments
and reinvested dividends aggregating approximately $23.1 million.
Also during the three months ended March 31, 2000, Wispark
Corporation secured $15.5 million of bank financing in the form
of adjustable rate mortgage notes due 2000-2003 to finance the
construction or purchase of various facilities. During the three
months ended March 31, 2000, Wisconsin Energy decreased its short-
term debt in the form of commercial paper by $137.2 million, the
net of a $10.4 million increase by Wisconsin Energy's non-utility
operations and a $147.6 million decrease attributable to
Wisconsin Electric. Also during the first quarter of 2000,
Wisconsin Energy paid $46.5 million of dividends on its common
stock compared to $44.9 million paid by Wisconsin Electric.
CAPITAL REQUIREMENTS AND RESOURCES: Excluding the cash paid for
the WICOR acquisition, capital requirements during the remainder
of 2000 are expected to be principally for construction
expenditures and for other investments, for long-term debt
maturity and sinking fund requirements, and for payments to the
Nuclear Decommissioning Trust Fund for the eventual
decommissioning of Point Beach Nuclear Plant. Including WICOR
and its subsidiaries, Wisconsin Energy's total consolidated
construction and other investment budget for the remainder of
2000 is approximately $580 million, including $325 million at
Wisconsin Electric. These cash requirements are expected to be
met through a combination of the following possible resources:
internal sources of funds from operations, short-term borrowings,
the issuance of intermediate or long-term debt, the issuance of
additional trust preferred securities, and proceeds from the sale
of new-issue common stock under Wisconsin Energy's stock plans.
The amount and timing of any capital market financing has not
been determined and will depend on market conditions and other
factors.
Wisconsin Energy funded the April 26, 2000 acquisition of WICOR,
Inc. through issuance in the institutional private placement
market of $1.2 billion of commercial paper with a weighted
average effective interest rate of 6.09%. Wisconsin Energy has
arranged for two new bank back-up credit facilities to provide
credit support for the issuance of Wisconsin Energy's commercial
paper: a $1.0 billion 364-day bank back-up credit facility and a
$500 million three-year bank back-up credit facility. In
addition, approximately $300 million of WICOR debt remains
outstanding. The following table shows Wisconsin Energy's
consolidated capitalization structure at March 31, 2000, as
reported, and pro formed to give effect to the acquisition of
WICOR as if the merger had occurred as of that date.
<TABLE>
<CAPTION>
March 31, 2000
Capitalization Structure - ------------------------------------------------------
Wisconsin Energy As Reported As Adjusted
- - - - - - - - -------------------------- ------------------------- --------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Common Equity $2,034,985 42.0% $2,062,182 32.5%
Preferred Stock 30,450 0.6% 30,450 0.5%
Trust Preferred Securities 200,000 4.1% 200,000 3.1%
Long-Term Debt (Including
current maturities 2,204,844 45.6% 2,426,544 38.2%
Short-Term Debt 370,285 7.7% 1,635,137 25.7%
---------- ------ ---------- ------
$4,840,564 100.0% $6,354,313 100.0%
========== ====== ========== ======
</TABLE>
For additional information related to the acquisition of WICOR,
see "Factors Affecting Results of Operations" above as well as
Item 1. Financial Statements - "Notes to Financial Statements" in
Part I of this report.
Currently, Wisconsin Energy is conducting a strategic assessment
of its portfolio of non-utility assets. The Company may make
further investments and/or acquisitions from time to time in
projects or entities that are expected to provide a satisfactory
return on the investment. Wisconsin Energy may sell all or a
portion of Witech Corporation and a portion of its ownership
interest in certain Wisvest Corporation investments. As a
result, the Company expects that its future long-term capital
requirements as well as its capital resources may continue to
vary from historical levels.
On May 11, 2000, Wisconsin Energy announced that certain assets
of its non-utility real estate development company, Wispark
Corporation, would be sold over the next 12 to 18 months.
Wispark Corporation's assets are currently valued at
approximately $300 million, and Wisconsin Energy expects to sell
approximately 80% of these assets. Proceeds from the sale will
be used to pay down the Company's corporate debt.
In April 2000, in conjunction with consummation of Wisconsin
Energy's acquisition of WICOR, Moody's Investors Service
("Moody's") assigned a general corporate rating of A1 to
Wisconsin Energy and maintained its ratings of the debt
securities of Wisconsin Energy and Wisconsin Electric. Duff &
Phelps Inc. ("D&P") reaffirmed its long-term credit ratings of
Wisconsin Energy and Wisconsin Energy Capital Corporation as well
as its short-term rating of Wisconsin Electric, but downgraded
its long-term credit ratings of Wisconsin Electric. Fitch
Investors Service ("Fitch") assigned initial credit ratings for
Wisconsin Energy, Wisconsin Energy Capital Corporation, WEC
Capital Trust I trust preferred securities and Wisconsin Electric
commercial paper and reaffirmed its long-term ratings of
Wisconsin Electric. Also in April 2000, Standard & Poors
Corporation ("S&P") lowered its ratings on Wisconsin Energy and
Wisconsin Energy's subsidiaries except for the short-term ratings
of Wisconsin Electric, which were reaffirmed. In conjunction
with its debt rating adjustments at the end of April 2000, S&P
removed all long-term ratings on Wisconsin Energy and its
subsidiaries from credit watch with negative implications,
assigning a negative outlook.
In June 1999, S&P and Moody's confirmed the ratings of securities
of Wisconsin Gas Company, WICOR's natural gas distribution
utility subsidiary ("Wisconsin Gas"). These rating actions
followed the June 28, 1999 announcement that Wisconsin Energy
would acquire WICOR. In April 2000, S&P revised the outlook on
Wisconsin Gas from stable to negative and Fitch assigned initial
credit ratings for Wisconsin Gas.
The following table summarizes various current ratings of
Wisconsin Energy's and Wisconsin Electric's securities by S&P,
Moody's, D&P and Fitch as well as securities of Wisconsin Gas by
S&P and Moody's. WICOR's holding company has no debt outstanding
and the commercial paper of WICOR Industries, Inc., a wholly-
owned subsidiary of WICOR, is unrated.
<TABLE>
<CAPTION>
S & P Moody's D & P Fitch
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Wisconsin Energy Corporation
Commercial Paper A-1 P-1 D-1 F1
Wisconsin Electric Power Company
Commercial Paper A-1+ P-1 D-1+ F1+
Senior Secured Debt AA- Aa2 AA AA
Unsecured Debt A+ Aa3 AA- AA-
Preferred Stock A aa3 AA- AA-
Wisconsin Gas Company
Commercial Paper A-1+ P-1 - F1+
Senior Unsecured Debt AA- Aa2 - AA-
Wisconsin Energy Capital Corporation
Unsecured Debt A+ A1 A+ A+
WEC Capital Trust I
Trust Preferred Securities A- a1 A A
</TABLE>
At March 31, 2000, Wisconsin Energy had $398 million of unused
lines of bank credit on a consolidated basis of which
$128 million was attributable to Wisconsin Electric. As noted
above, Wisconsin Energy obtained an additional $1.5 billion of
bank lines in April 2000 in conjunction with its acquisition of
WICOR. At March 31, 2000, WICOR had approximately $130 million
of unused bank lines on a consolidated basis of which $77 million
was attributable to Wisconsin Gas.
*****
For certain other information which may impact Wisconsin Energy's
and Wisconsin Electric's future financial condition or results of
operations, see Item 1. Financial Statements - "Notes to
Financial Statements" in Part I of this report as well as Item 1.
Legal Proceedings in Part II of this report.
CAUTIONARY FACTORS
This report and other documents or oral presentations contain or
may contain forward-looking statements made by or on behalf of
Wisconsin Energy, Wisconsin Electric or Wisconsin Gas. Such
statements are based upon management's current expectations and
are subject to risks and uncertainties that could cause Wisconsin
Energy's, Wisconsin Electric's or Wisconsin Gas' actual results
to differ materially from those contemplated in the statements.
Readers are cautioned not to place undue reliance on the forward-
looking statements. When used in written documents or oral
presentations, the terms "anticipate," "believe," "estimate,"
"expect," "objective," "plan," "possible," "potential," "project"
and similar expressions are intended to identify forward-looking
statements. In addition to the assumptions and other factors
referred to specifically in connection with such statements,
factors that could cause Wisconsin Energy's, Wisconsin Electric's
or Wisconsin Gas' actual results to differ materially from those
contemplated in any forward-looking statements include, among
others, the following.
OPERATING, FINANCIAL AND INDUSTRY FACTORS
* Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; availability of
Wisconsin Electric's, Edison Sault Electric Company's or Wisvest
Corporation's generating facilities; unscheduled generation
outages, or unplanned maintenance or repairs; unanticipated
changes in fossil fuel, nuclear fuel, purchased power, gas supply
or water supply costs or availability due to higher demand,
shortages, transportation problems or other developments;
nonperformance by electric energy or natural gas suppliers under
existing power purchase or gas supply contracts; nuclear or
environmental incidents; resolution of spent nuclear fuel storage
and disposal issues; electric transmission or gas pipeline system
constraints; unanticipated organizational structure or key
personnel changes; collective bargaining agreements with union
employees or work stoppages; inflation rates; or demographic and
economic factors affecting utility service territories or
operating environment.
* Regulatory factors such as unanticipated changes in rate-
setting policies or procedures; unanticipated changes in
regulatory accounting policies and practices; industry
restructuring initiatives; transmission system operation and/or
administration initiatives; recovery of costs of previous
investments made under traditional regulation; required approvals
for new construction; changes in the United States Nuclear
Regulatory Commission's regulations related to Point Beach
Nuclear Plant; changes in the United States Environmental
Protection Agency's regulations as well as regulations from the
Wisconsin or Michigan Departments of Natural Resources or the
state of Connecticut related to emissions from fossil fuel power
plants; or the siting approval process for new generation and
transmission facilities.
* The rapidly changing and increasingly competitive electric and
gas utility environment as market-based forces replace strict
industry regulation and other competitors enter the electric and
gas markets resulting in increased wholesale and retail
competition.
* Consolidation of the industry as a result of the combination
and acquisition of utilities in the midwest, nationally and
globally.
* Restrictions imposed by various financing arrangements and
regulatory requirements on the ability of Wisconsin Electric,
Wisconsin Gas or other subsidiaries to transfer funds to
Wisconsin Energy in the form of cash dividends, loans or
advances.
* Changes in social attitudes regarding the utility and power
industries.
* Customer business conditions including demand for their
products or services and supply of labor and material used in
creating their products and services.
* The cost and other effects of legal and administrative
proceedings, settlements, investigations and claims, and changes
in those matters including the final outcome of the Giddings &
Lewis, Inc. / City of West Allis lawsuit against Wisconsin
Electric.
* Factors affecting the availability or cost of capital such as
changes in interest rates; the Company's capitalization
structure; market perceptions of the utility industry, the
Company or any of its subsidiaries; or security ratings.
* Federal, state or local legislative factors such as changes in
tax laws or rates; changes in trade, monetary and fiscal
policies, laws and regulations; electric and gas industry
restructuring initiatives; or changes in environmental laws and
regulations.
* Authoritative generally accepted accounting principle or
policy changes from such standard setting bodies as the Financial
Accounting Standards Board and the Securities and Exchange
Commission.
* Unanticipated technological developments that result in
competitive disadvantages and create the potential for impairment
of existing assets.
* Possible risks associated with non-utility diversification
such as competition; operating risks; dependence upon certain
suppliers and customers; the cyclical nature of property values
that could affect real estate investments; unanticipated changes
in environmental or energy regulations; timely regulatory
approval without onerous conditions of potential acquisitions;
risks associated with minority investments, where there is a
limited ability to control the development, management or
operation of the project; and the risk of higher interest costs
associated with potentially reduced securities ratings by
independent rating agencies as a result of these and other
factors.
* Legislative or regulatory restrictions or caps on non-utility
acquisitions, investments or projects, including the state of
Wisconsin's amended public utility holding company law.
* Factors affecting foreign non-utility operations and
investments including foreign governmental actions; foreign
economic and currency risks; political instability; and
unanticipated changes in foreign environmental or energy
regulations.
* Other business or investment considerations that may be
disclosed from time to time in Wisconsin Energy's, Wisconsin
Electric's or Wisconsin Gas' Securities and Exchange Commission
filings or in other publicly disseminated written documents.
BUSINESS COMBINATION FACTORS
* Consummation of the merger with WICOR, which will have a
significant effect on the future operations and financial
position of Wisconsin Energy. Specific factors include:
* Unanticipated costs or difficulties related to the integration
of the businesses of Wisconsin Energy and WICOR.
* Unanticipated financing or other consequences resulting from
the additional short-term debt issued to fund the acquisition of
WICOR.
* Unexpected difficulties or delays in realizing anticipated net
cost savings or unanticipated effects of the qualified five-year
electric and gas rate freeze ordered by the Public Service
Commission of Wisconsin as a condition of approval of the merger.
Wisconsin Energy, Wisconsin Electric and Wisconsin Gas undertake
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
For information concerning Wisconsin Energy's and Wisconsin
Electric's market risk exposures, see Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations - "Factors Affecting Results of Operations - Market
Risks" in Part II of Wisconsin Energy's and Wisconsin Electric's
combined Annual Report on Form 10-K for the year ended
December 31, 1999.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
The following should be read in conjunction with Item 3. Legal
Proceedings in Part I of Wisconsin Energy's and Wisconsin
Electric's combined Annual Report on Form 10-K for the year ended
December 31, 1999.
ENVIRONMENTAL MATTERS
GIDDINGS & LEWIS, INC. / CITY OF WEST ALLIS LAWSUIT: In July
1996, Giddings & Lewis, Inc., Kearney & Trecker Corporation, now
a part of Giddings & Lewis, Inc., and the City of West Allis
brought an action in the Milwaukee County Circuit Court alleging
that in 1959 Wisconsin Electric had deposited cyanide
contaminated wood chips at two sites in West Allis, Wisconsin,
owned by the plaintiffs. Environmental remediation at both sites
was completed several years ago, with the current owners paying
for disposal of materials found on their respective portions of
the sites. Internal investigations led Wisconsin Electric to
believe that it was not the source of this waste.
In July 1999, a jury issued a verdict against Wisconsin Electric
awarding the plaintiffs $4.5 million in compensatory damages for
clean-up costs and loss of property value and $100 million in
punitive damages. In October 1999, the Circuit Court denied
Wisconsin Electric's post trial motions and directed that
judgment on the verdict be entered. Wisconsin Electric has filed
a notice of appeal of the judgment to the Wisconsin Court of
Appeals.
In December 1999, in order to stop the post-judgment accrual of
interest at 12% per annum during the pendency of the appeal,
Wisconsin Electric tendered a contested liability payment of
$110 million, which is part of "Deferred Charges and Other
Assets - Other" on the condensed balance sheets, to the Clerk of
Circuit Court for Milwaukee County representing the amount of the
verdict and accrued interest. Under Wisconsin law, the
plaintiffs are liable to Wisconsin Electric upon reversal or
reduction of the judgment for the applicable amount of the funds
tendered with interest.
In further post-trial proceedings, the plaintiffs filed with the
Circuit Court a motion for sanctions based upon representations
made by Wisconsin Electric during trial that it had no insurance
coverage for the punitive damage award. The Circuit Court held
hearings on the sanctions issue in February 2000. On April 27,
2000, the Circuit Court Judge issued a ruling on the sanctions
matter, imposing the following sanctions against Wisconsin
Electric: (i) "judgment in the alternative" as a sanction,
thereby finding an alternative basis upon which to sustain the
$104.5 million verdict returned by the jury; (ii) a bar against
Wisconsin Electric pursuing insurance coverage for the punitive
damage portion of the verdict; and (iii) a requirement that
Wisconsin Electric pay the plaintiffs' costs relating to the
sanctions matter. In addition to its appeal of the judgment
entered on the jury's verdict, Wisconsin Electric will also
appeal the Judge's ruling on the sanctions matter.
In the opinion of management, based in part on the advice of
legal counsel, the jury verdict was not supported by the evidence
or the law and the unprecedented award of punitive damages of
this magnitude was unwarranted and should therefore be reversed
or substantially reduced on appeal. Management also believes
that the sanctions imposed by the Judge were not supported by the
evidence or the law. As such, Wisconsin Electric has not
established a reserve for potential damages from this suit.
RATES AND REGULATORY MATTERS
2000/2001 TEST YEARS: In September 1999, Wisconsin Electric
submitted an application with the Public Service Commission of
Wisconsin requesting incremental price relief for specific
capital investments for electric and gas system reliability and
safety and for a one-time accounting adjustment. The application
further recommended the adoption of performance-based measures
and incentives. In its application, Wisconsin Electric proposed
a two-step price increase. The first requested increase, to be
effective January 1, 2000, totaled $46 million (3.1%) for
electric operations and $8 million (2.3%) for gas operations.
The second requested price increase, to be effective January 1,
2001, totaled $29 million (2.0%) for electric operations.
On December 23, 1999, Wisconsin Electric requested that interim
price relief be granted by the Public Service Commission of
Wisconsin, subject to refund, as soon as possible because it
anticipated that a final order on its price request would not be
issued until the summer of 2000. Wisconsin Electric withdrew its
request to implement performance-based prices because some
elements of the proposed performance-based price plan were not
compatible with the Public Service Commission of Wisconsin's
approval of the Company's merger with WICOR. On March 23, 2000,
the Public Service Commission of Wisconsin approved Wisconsin
Electric's request for interim price increases, authorizing a
$25.2 million (1.7%) increase for electric operations and an
$11.6 million (3.1%) increase for gas operations. The interim
increase, which is subject to potential refund, became effective
April 11, 2000. Rates in the interim order are based on a 12.2%
return on common equity and will be in effect until superceded by
a final order establishing new rates.
The Public Service Commission of Wisconsin finished hearing
testimony on Wisconsin Electric's original September 1999
application on April 26, 2000. Subject to unexpected delays or
other matters that might arise in the interim, Wisconsin Electric
expects a final order on its September 1999 incremental price
relief application to be issued by the Public Service Commission
of Wisconsin in the summer of 2000.
As a condition of its approval of Wisconsin Energy's merger with
WICOR, the Public Service Commission of Wisconsin ordered a
qualified five-year rate freeze that becomes effective on
January 1, 2001 concurrent with any second step rate changes
included in the final order on the 2000/2001 test years.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following Exhibits are filed with or incorporated by
reference in the applicable Form 10-Q report:
Exhibit No.
- - - - - - - - -----------
WISCONSIN ENERGY CORPORATION
2.1 Agreement and Plan of Merger, dated as of June 27, 1999,
as amended as of September 9, 1999, by and among Wisconsin Energy
Corporation, WICOR, Inc. and CEW Acquisition, Inc.(incorporated
herein by reference to Appendix A to the joint proxy
statement/prospectus dated September 10, 1999, included in
Wisconsin Energy's Registration on Form S-4 filed on September 9,
1999 (File No. 333-86827) (the "Form S-4")).
2.2 Amendment to Agreement and Plan of Merger dated as of
September 9, 1999 (incorporated herein by reference to Exhibit
2.2 to the Form S-4).
2.3 Second Amendment to Agreement and Plan of Merger dated as
of April 26, 2000 (incorporated herein by reference to Exhibit
2.3 to Wisconsin Energy's Current Report on Form 8-K dated as of
April 26, 2000).
3.1 Bylaws of Wisconsin Energy, as amended to May 1, 2000.
10.1(a) Updated form of Incentive Stock Option Agreement under
1993 Omnibus Stock Incentive Plan, as amended.
10.1(b) Updated form of Non-Qualified Stock Option Agreement
under 1993 Omnibus Stock Incentive Plan, as amended.
10.2(a) Employment Agreement with George E. Wardeberg as Vice
Chairman of the Board of Directors of Wisconsin Energy
Corporation, effective April 26, 2000.
10.2(b) Non-Qualified Stock Option Agreement with George E.
Wardeberg, dated April 26, 2000, granted pursuant to
the Employment Agreement.
10.3 Amended and Restated Wisconsin Energy Corporation
Special Executive Severance Policy, effective as of
April 26, 2000.
10.4 Amended and Restated Wisconsin Energy Corporation
Executive Severance Policy, effective as of April 26,
2000.
27.1 Wisconsin Energy Corporation Financial Data Schedule
for the three months ended March 31, 2000.
27.2 Wisconsin Energy Corporation Restated Financial Data
Schedule for the three months ended March 31, 1999,
which reflects the reclassification of certain amounts
to conform to Wisconsin Energy's current financial
statement presentation.
WISCONSIN ELECTRIC POWER COMPANY
3.2 Bylaws of Wisconsin Electric Power Company as amended
to May 1, 2000.
27.3 Wisconsin Electric Power Company Financial Data
Schedule for the three months ended March 31, 2000.
27.4 Wisconsin Electric Power Company Restated Financial
Data Schedule for the three months ended March 31,
1999, which reflects the reclassification of certain
amounts to conform to Wisconsin Electric's current
financial statement presentation.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Wisconsin Energy or by
Wisconsin Electric during the quarter ended March 31, 2000.
A Current Report on Form 8-K dated as of April, 26, 2000 was
filed by Wisconsin Energy disclosing the consummation of
Wisconsin Energy's acquisition of WICOR, Inc., an update on
securities ratings, and the Circuit Court Judge's ruling on
the sanctions matter relating to the Giddings & Lewis / City
of West Allis lawsuit, and incorporating and filing as an
exhibit WICOR's historical financial statements.
A Current Report on Form 8-K dated as of April 27, 2000 was
filed by Wisconsin Electric disclosing an update on
securities ratings and the Circuit Court Judge's ruling on
the sanctions matter relating to the Giddings & Lewis / City
of West Allis lawsuit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, each registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
WISCONSIN ENERGY CORPORATION
----------------------------
(Registrant)
/s/ Paul Donovan
Date: May 12, 2000 -----------------------------------
Paul Donovan, Senior Vice President,
Chief Financial Officer and duly
authorized officer
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
(Registrant)
/s/ Calvin H. Baker
Date: May 12, 2000 -----------------------------------------
Calvin H. Baker, Vice President -
Finance, Chief Financial Officer and duly
authorized officer
WISCONSIN ENERGY CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
EXHIBIT INDEX
The following exhibits are filed with or incorporated by
reference in this report:
Exhibit No.
--------------
2.1 Agreement and Plan of Merger, dated as of June 27, 1999,
as amended as of September 9, 1999, by and among Wisconsin Energy
Corporation, WICOR, Inc. and CEW Acquisition, Inc.(incorporated
herein by reference to Appendix A to the joint proxy
statement/prospectus dated September 10, 1999, included in
Wisconsin Energy's Registration on Form S-4 filed on September 9,
1999 (File No. 333-86827) (the "Form S- 4")).
2.1 Amendment to Agreement and Plan of Merger dated as of
September 9, 1999 (incorporated herein by reference to Exhibit
2.2 to the Form S-4).
2.1 Second Amendment to Agreement and Plan of Merger dated as
of April 26, 2000 (incorporated herein by reference to Exhibit
2.3 to Wisconsin Energy's Current Report on Form 8-K dated as of
April 26, 2000).
3.1 Bylaws of Wisconsin Energy, as amended to May 1, 2000.
10.1(a) Updated form of Incentive Stock Option Agreement under
1993 Omnibus Stock Incentive Plan, as amended.
10.1(b) Updated form of Non-Qualified Stock Option Agreement
under 1993 Omnibus Stock Incentive Plan, as amended.
10.2(a) Employment Agreement with George E. Wardeberg as Vice
Chairman of the Board of Directors of Wisconsin Energy
Corporation, effective April 26, 2000.
10.2(b) Non-Qualified Stock Option Agreement with George E.
Wardeberg, dated April 26, 2000, granted pursuant to
the Employment Agreement.
10.3 Amended and Restated Wisconsin Energy Corporation
Special Executive Severance Policy, effective as of
April 26, 2000.
10.4 Amended and Restated Wisconsin Energy Corporation
Executive Severance Policy, effective as of April 26,
2000.
27.1 Wisconsin Energy Corporation Financial Data Schedule
for the three months ended March 31, 2000.
27.2 Wisconsin Energy Corporation Restated Financial Data
Schedule for the three months ended March 31, 1999,
which reflects the reclassification of certain amounts
to conform to Wisconsin Energy's current financial
statement presentation.
BYLAWS Exhibit (3)-1
of
WISCONSIN ENERGY CORPORATION
As Amended to May 1, 2000, Inclusive
TABLE OF CONTENTS
ARTICLE I. STOCKHOLDERS
1.01 Annual Meeting
1.02 Special Meetings
1.03 Place of Meetings; Postponements and Adjournments
1.04 Notices to Stockholders
(a) Required Notice
(b) Fundamental Transactions
1.05 Fixing of Record Date
1.06 Quorum and Voting Requirements
1.07 Conduct of Meetings
1.08 Proxies; Voting and Inspectors of Election
1.09 Stockholder Unanimous Consent Without a Meeting
1.10 Stockholder Waiver of Notice
1.11 Notice of Stockholder Nomination(s) and/or Proposal(s)
ARTICLE II. BOARD OF DIRECTORS
2.01 Number
2.02 Classification
2.03 Election and Tenure
2.04 Removal
2.05 Vacancies
2.06 Regular Meetings
2.07 Special Meetings
2.08 Meetings by Telephone or Other Communication Technology
2.09 Notice of Meetings
2.10 Quorum
2.11 Manner of Acting
2.12 Committees
2.13 Compensation
2.14 Presumption of Assent
2.15 Director Unanimous Consent Without a Meeting
ARTICLE III. OFFICERS
3.01 Appointment
3.02 Resignation and Removal
3.03 Vacancies
3.04 Powers and Duties
3.05 Execution of Instruments
ARTICLE IV. CERTIFICATES FOR SHARES AND THEIR TRANSFER
4.01 Stock Certificates and Facsimile Signatures
4.02 Transfer of Stock
4.03 Lost, Destroyed or Stolen Certificates
4.04 Shares Without Certificates
ARTICLE V. INDEMNIFICATION
5.01 Mandatory Indemnification
5.02 Certain Definitions
5.03 Legal Enforceability
5.04 Limitation on Modification or Termination
5.05 Non-Exclusive Bylaw
ARTICLE VI. OTHER INDEMNIFICATION PROVISIONS
6.01 Indemnification for Successful Defense
6.02 Other Indemnification
6.03 Written Request
6.04 Nonduplication
6.05 Determination of Right to Indemnification
6.06 Advance of Expenses
6.07 Limitations on Indemnification
6.08 Court-Ordered Indemnification
6.09 Indemnification and Allowance of Expenses of Employees and
Agents
6.10 Insurance
6.11 Securities Law Claims
6.12 Liberal Construction
ARTICLE VII. CONTRACTS, CHECKS, NOTES, BONDS, ETC.
7.01 Contracts
7.02 Checks, Drafts, Etc.
ARTICLE VIII. FISCAL YEAR
ARTICLE IX. CORPORATE SEAL
ARTICLE X. EFFECT OF HEADINGS
ARTICLE XI. AMENDMENTS
11.01 By Stockholders
11.02 By Directors
11.03 Implied Amendments
11.04 Vote Required for Certain Amendments
ARTICLE I.
STOCKHOLDERS
1.01. Annual Meeting. The annual meeting of the
stockholders of the corporation shall be held each year on
the first business day of June, or on such earlier or later
date and at the time designated by or under the authority of
the Board of Directors, the Chairman of the Board, the
President or the Corporate Secretary, for the purpose of
electing directors and for the transaction of such other
business as may properly come before the meeting.
1.02. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by the Wisconsin Business Corporation Law, may be
called by the Chairman of the Board, the President or a
majority of the Board of Directors. If and as required by
the Wisconsin Business Corporation Law, a special meeting
shall be called upon written demand describing one or more
purposes for which it is to be held by holders of shares
with at least 10% of the votes entitled to be cast on any
issue proposed to be considered at the meeting. The time and
purpose or purposes of any special meeting shall be
described in the notice required by Section 1.04 of these
Bylaws and only business within the purpose(s) described in
such notice shall be conducted at such meeting.
1.03. Place of Meetings; Postponements and
Adjournments. The Board of Directors, the Chairman of the
Board, the President or the Corporate Secretary may
designate any place, either within or without the State of
Wisconsin, as the place of meeting for any annual meeting or
any special meeting, including any adjourned meeting. The
Board of Directors, the Chairman of the Board, the President
or the Corporate Secretary may postpone any previously
scheduled annual meeting or special meeting by giving public
notice of the postponed meeting date at any time prior to
the scheduled meeting date. If no designation is made, the
place of meeting shall be the principal office of the
corporation. Any meeting may be adjourned from time to time,
whether or not a quorum is present, by the chairperson of
the meeting or by vote of a majority of the votes entitled
to be cast by the shares represented thereat.
1.04. Notices to Stockholders.
(a) Required Notice. Notice may be communicated by
mail, private carrier, or any other means permissible under
Wisconsin law. Written notice stating the scheduled place,
day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is
called, shall be communicated or sent not less than ten (10)
days, unless a longer period is required by the Wisconsin
Business Corporation Law or the Articles of Incorporation,
nor more than ninety (90) days, unless a longer period is
permitted or a shorter period is required by the Wisconsin
Business Corporation Law, before the date of the meeting, by
or at the direction of the Chairman of the Board, the
President or the Corporate Secretary, to each stockholder of
record entitled to vote at such meeting or, for the
fundamental transactions described in subsections (b)(1) to
(4) below, for which the Wisconsin Business Corporation Law
requires that notice be given to stockholders not entitled
to vote, to all stockholders of record. For purposes of
this Section 1.04, notice by "electronic transmission" (as
defined in the Wisconsin Business Corporation Law) is
written notice. Written notice is effective (1) when
mailed, if mailed postpaid and addressed to the
stockholder's address shown in the corporation's current
record of stockholders; (2) when electronically transmitted
to the stockholder in a manner authorized by the
stockholder. At least twenty (20) days' notice shall be
provided if the purpose, or one of the purposes, of the
meeting is to consider a plan of merger or share exchange
for which stockholder approval is required by law, or the
sale, lease, exchange or other disposition of all or
substantially all of the corporation's property, with or
without good will, otherwise than in the usual and regular
course of business. A stockholder may waive notice in
accordance with Section 1.10 of these Bylaws.
(b) Fundamental Transactions. If a purpose of any
stockholder meeting is to consider either: (1) a proposed
amendment to the Articles of Incorporation (including any
restated articles); (2) a plan of merger or share exchange
for which stockholder approval is required by law; (3) the
sale, lease, exchange or other disposition of all or
substantially all of the corporation's property, with or
without good will, otherwise than in the usual and regular
course of business; (4) the dissolution of the corporation;
or (5) the removal of a director, the notice must so state
and in cases (1), (2) and (3) above must be accompanied by,
respectively, a copy or summary of the: (1) proposed
articles of amendment or a copy of the restated articles
that identifies any amendment or other change; (2) proposed
plan of merger or share exchange; or (3) proposed
transaction for disposition of all or substantially all of
the corporation's property. If the proposed corporate action
creates dissenters' rights, the notice must state that
stockholders and beneficial stockholders are or may be
entitled to assert dissenters' rights, and must be
accompanied by a copy of Sections 180.1301 to 180.1331 (or
successor provisions) of the Wisconsin Business Corporation
Law.
1.05. Fixing of Record Date. The Board of Directors,
the Chairman of the Board, the President or the Corporate
Secretary or any other officer authorized by the Board of
Directors, may fix in advance a date as the record date for
one or more voting groups for any determination of
stockholders entitled to notice of a stockholders' meeting,
to demand a special meeting, to vote, or to take any other
action, such date in any case to be not more than seventy
(70) days and, in case of a meeting of stockholders,
dividend or stock split, not less than ten (10) days prior
to the meeting or action requiring such determination of
stockholders, and may fix the record date for determining
stockholders entitled to a share dividend or distribution.
If within thirty (30) days after the corporation receives
one or more written demands for a special stockholder
meeting that purport to satisfy the requirements of Section
180.0702(1)(b) of the Wisconsin Business Corporation Law (or
any successor provision) no record date has been fixed
pursuant to the first sentence of this Section 1.05 for the
determination of stockholders entitled to demand such a
stockholder meeting, the record date for determining
stockholders entitled to demand such meeting shall be the
date that the first stockholder signed the demand. If no
record date has been fixed pursuant to the first sentence of
this Section 1.05 for the determination of stockholders
entitled (A) to notice of or to vote at a meeting of
stockholders prior to the time that notice of the meeting is
mailed or otherwise delivered to stockholders, or (B) to
consent to action without a meeting within thirty (30) days
after the corporation receives the first written consent to
stockholder action without a meeting, (a) the close of
business on the day before the first notice of the meeting
is mailed or otherwise delivered to stockholders or (b) the
date that the first stockholder signed the first written
consent to stockholder action without a meeting,
respectively, shall be the record date for the determination
of such stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been
made as provided in this section, such determination shall
be applied to any postponement or adjournment thereof unless
the Board of Directors fixes a new record date and except as
otherwise required by law. A new record date must be set if
a meeting is postponed or adjourned to a date more than
120 days after the date fixed for the original meeting.
1.06. Quorum and Voting Requirements. Except as
otherwise provided in the Articles of Incorporation or in
the Wisconsin Business Corporation Law, a majority of the
votes entitled to be cast by shares entitled to vote as a
separate voting group on a matter, represented in person or
by proxy, shall constitute a quorum of that voting group for
action on that matter at a meeting of stockholders. If a
quorum exists, action on a matter, other than the election
of directors, by a voting group is approved if the votes
cast within the voting group favoring the action exceed the
votes cast opposing the action unless a greater number of
affirmative votes is required by the Wisconsin Business
Corporation Law, the Articles of Incorporation, or any other
provision of these Bylaws. If the Articles of Incorporation
or the Wisconsin Business Corporation Law provide for voting
by two (2) or more classes or voting groups on a matter,
action on that matter is taken only when voted upon by each
of those voting groups counted separately.
1.07. Conduct of Meetings. The Chairman of the
Board, or in his absence or at his request, the Vice
Chairman of the Board, and in his absence, the President,
and in the President's absence, a Vice President, and in
their absence, any person chosen by the stockholders present
shall call the meeting of the stockholders to order and
shall act as chairperson of the meeting, and the Corporate
Secretary shall act as secretary of all meetings of the
stockholders, but, in the absence of the Corporate
Secretary, the chairperson of the meeting may appoint any
other person to act as secretary of the meeting.
1.08. Proxies; Voting and Inspectors of Election. At
all meetings of stockholders, a stockholder entitled to vote
may vote in person or by proxy appointed as provided in the
Wisconsin Business Corporation Law. The means by which a
stockholder or the stockholder's authorized officer,
director, employee, agent or attorney-in-fact may authorize
another person to act for the stockholder by appointing the
person as proxy include:
(a) Appointment of a proxy in writing by signing or
causing the stockholder's signature to be affixed to an
appointment form by any reasonable means, including, but not
limited to, by facsimile signature.
(b) Appointment of a proxy by transmitting or
authorizing the transmission of an electronic transmission
of the appointment to the person who will be appointed as
proxy or to a proxy solicitation firm, proxy support service
organization or like agent authorized to receive the
transmission by the person who will be appointed as proxy.
Every electronic transmission shall contain, or be
accompanied by, information that can be used to reasonably
determine that the stockholder transmitted or authorized the
transmission of the electronic transmission. Any person
charged with determining whether a stockholder transmitted
or authorized the transmission of the electronic
transmission shall specify the information upon which the
determination is made.
An appointment of a proxy is effective when a signed
appointment form or an electronic transmission of the
appointment is received by the inspector of election or the
officer or agent of the corporation authorized to tabulate
votes. An appointment is valid for 11 months unless a
different period is expressly provided in the appointment.
An appointment of a proxy is revocable unless the
appointment form or electronic transmission states that it
is irrevocable and the appointment is coupled with an
interest. The presence of a stockholder who has made an
effective proxy appointment shall not of itself constitute a
revocation.
Voting at meetings of stockholders need not be by
written ballot unless so determined by the Board of
Directors, the Chairman of the Board, the President or the
Corporate Secretary. Voting at meetings of stockholders
shall be conducted by one or more inspectors of election
appointed by the Board of Directors, the Chairman of the
Board, the President or the Corporate Secretary. However,
no director or person who is a candidate for the office of
director shall be appointed as such inspector. The
inspectors, or persons representing the inspector if the
inspector is an institution, before entering upon the
discharge of their duties, shall take and subscribe an oath
faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best
of their ability.
1.09. Stockholder Unanimous Consent Without a
Meeting. Any action required by the Articles of
Incorporation, Bylaws or any provision of law to be taken at
a meeting of stockholders or any other action which may be
taken at such a meeting may be taken without a meeting if
consent in writing setting forth the action so taken shall
be signed by all of the stockholders entitled to vote with
respect to the subject matter thereof and such consent shall
have the same force and effect as a unanimous vote.
1.10. Stockholder Waiver of Notice. A stockholder
may waive any notice required by the Wisconsin Business
Corporation Law, the Articles of Incorporation or these
Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing and signed by the
stockholder entitled to the notice, shall contain the same
information that would have been required in the notice
under the Wisconsin Business Corporation Law except that the
time and place of meeting need not be stated, and shall be
delivered to the corporation for inclusion in the corporate
records. A stockholder's attendance at a meeting, in person
or by proxy, waives objection to both of the following:
(a) Lack of notice or defective notice of the meeting,
unless the stockholder at the beginning of the meeting or
promptly upon arrival objects to holding the meeting or
transacting business at the meeting.
(b) Consideration of a particular matter at the
meeting that is not within the purpose described in the
meeting notice, unless the stockholder objects to
considering the matter when it is presented.
1.11. Notice of Stockholder Nomination(s) and/or
Proposal(s). Except with respect to nomination(s) or
proposal(s) adopted or recommended by the Board of Directors
for inclusion in the corporation's proxy statement for its
annual meeting, a stockholder entitled to vote at a meeting
may nominate a person or persons for election as director(s)
or propose action(s) to be taken at a meeting only if
written notice of any stockholder nomination(s) and/or
proposal(s) to be considered for a vote at an annual meeting
of stockholders is delivered personally or mailed by
Certified Mail-Return Receipt Requested at least seventy
(70) days and not more than one hundred (100) days before
the scheduled date of such meeting to the Corporate
Secretary of the corporation at the principal business
office of the corporation. With respect to stockholder
nomination(s) for the election of directors each such notice
shall set forth: (a) the name and address of the stockholder
who intends to make the nomination(s), of any beneficial
owner of shares on whose behalf such nomination is being
made and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting
(including the number of shares the stockholder owns as of
the record date (or as of the most recent practicable date
if no record date has been set) and the length of time the
shares have been held) and intends to appear in person or by
proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all
arrangements and understandings between the stockholder or
any beneficial holder on whose behalf it holds such shares,
and their respective affiliates, and each nominee and any
other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would
have been required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission (whether or not such rules are applicable) had
each nominee been nominated, or intended to be nominated, by
the Board of Directors; and (e) the consent of each nominee
to serve as a director of the corporation if so elected.
With respect to stockholder proposal(s) for action(s) to be
taken at an annual meeting of stockholders, the notice shall
clearly set forth: (a) the name and address of the
stockholder who intends to make the proposal(s); (b) a
representation that the stockholder is a holder of record of
the stock of the corporation entitled to vote at the meeting
(including the number of shares the stockholder owns as of
the record date (or as of the most recent practicable date
if no record date has been set) and the length of time the
shares have been held) and intends to appear in person or by
proxy to make the proposal(s) specified in the notice;
(c) the proposal(s) and a brief supporting statement of such
proposal(s); and (d) such other information regarding the
proposal(s) as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission (whether or not such
rules are applicable).
Except with respect to nomination(s) or proposal(s)
adopted or recommended by the Board of Directors for
inclusion in the notice to stockholders for a special
meeting of stockholders, a stockholder entitled to vote at a
special meeting may nominate a person or persons for
election as director(s) and/or propose action(s) to be taken
at a meeting only if written notice of any stockholder
nomination(s) and/or proposal(s) to be considered for a vote
at a special meeting is delivered personally or mailed by
Certified Mail-Return Receipt Requested to the Corporate
Secretary of the corporation at the principal business
office of the corporation so that it is received in a
reasonable period of time before such special meeting and
only if such nomination or proposal is within the purposes
described in the notice to stockholders of the special
meeting. All other notice requirements regarding stockholder
nomination(s) and/or proposal(s) applicable to annual
meetings also apply to nomination(s) and/or proposal(s) for
special meetings.
The chairperson of the meeting may refuse to
acknowledge the nomination(s) and/or proposal(s) of any
person made without compliance with the foregoing
procedures. This section shall not affect the corporation's
rights or responsibilities with respect to its proxies or
proxy statement for any meeting.
ARTICLE II.
BOARD OF DIRECTORS
2.01. Number. The number of directors constituting
the whole Board of Directors shall be such number as shall
be fixed from time to time by the affirmative vote of the
whole Board but in no event shall the number be less than
three. Until so fixed at a different number, the number
shall be nine. 1 The number of directors at any time
constituting the whole Board shall not be reduced so as to
shorten the term of any director then in office. Directors
shall be stockholders of the corporation.
The directors shall hold office until the next annual
meeting of stockholders at which their respective terms of
office shall expire and until their respective successors
are duly elected and qualified.
2.02. Classification. The directors shall be divided
into three classes as nearly equal in number as possible,
the term of one class expiring each year. Except for any
director elected pursuant to Section 2.05 of these Bylaws
and any director elected by the stockholders to fill a
vacancy for the remainder of a three year term, whose terms
of office may be less than three years, directors shall be
elected for three year terms. However, at any time when
there shall be a complete vacancy of the Board, the
directors of Class I shall be elected to hold office until
the next succeeding annual meeting of stockholders; the
directors of Class II until the second succeeding annual
meeting of stockholders; and the directors of Class III
until the third succeeding annual meeting of stockholders,
and in each foregoing case, until their respective
successors are duly elected and qualified. If, at any
meeting of stockholders, directors of more than one class
are to be elected, whether due to a vacancy or vacancies on
the Board of Directors, or otherwise, each class of
directors to be elected at the meeting shall be nominated
and voted for in a separate election.
2.03. Election and Tenure. Unless action is taken
without a meeting under these Bylaws, directors shall be
elected by a plurality of the votes cast by the shares
entitled to vote in the election at a stockholders meeting
at which a quorum is present. Each director shall hold
office until the end of such director's term and until such
director's successor has been elected, or until such
director's prior death, resignation or removal. A director
may resign at any time by filing a written resignation with
the Corporate Secretary of the corporation.
2.04. Removal. A director may be removed from office
only by affirmative vote by a majority if for cause, or at
least 80% if without cause, of the aggregate number of votes
which the holders of the then outstanding shares of Common
Stock and Preferred Stock are entitled to cast, voting
together as a class, in the election of directors.
2.05. Vacancies. Any vacancy occurring in the Board
of Directors, including a vacancy created by an increase in
the number of directors, may be filled by the stockholders
or the Board of Directors. If the directors remaining in
office constitute fewer than a quorum of the Board, the
directors may fill a vacancy by the affirmative vote of a
majority of all directors remaining in office. The director
filling the vacancy shall serve for a term equal to the
remaining term of the directors in the class of directors in
which the vacancy occurred or in which the new director
position was created.
2.06. Regular Meetings. Regular meetings of the
Board of Directors and any committee thereof shall be held
at such time and place, either within or without the State
of Wisconsin, as may from time to time be fixed by the Board
or such committee without other notice than the schedule
prepared by the Corporate Secretary or the resolution or
other action of the Board or committee establishing the time
and place of such regular meetings.
2.07. Special Meetings. Special meetings of the
Board of Directors may be called by or at the request of the
Board of Directors, the Executive Committee, the Chairman of
the Board, the President, any committee designated by the
Board with specific authority to do such or any two
(2) directors. Special meetings of any committee may be
called by or at the request of the foregoing persons or the
chairman of the committee. The persons calling any special
meeting of the Board of Directors or committee may fix any
place, either within or without the State of Wisconsin, as
the place for holding any special meeting called by them,
and if no other place is fixed the place of meeting shall be
the principal business office of the corporation.
2.08. Meetings by Telephone or Other Communication
Technology. (a) Any or all directors may participate in a
regular or special meeting of the Board of Directors or in a
committee meeting by, or conduct the meeting through the use
of, telephone or any other means of communication by which
either: (i) all participating directors may simultaneously
hear each other during the meeting or (ii) all communication
during the meeting is immediately transmitted to each
participating director, and each participating director is
able to immediately send messages to all other participating
directors.
(b) If a meeting will be conducted through the use of
any means described in paragraph (a), all participating
directors shall be informed that a meeting is taking place
at which official business may be transacted. A director
participating in a meeting by any means described in
paragraph (a) is deemed to be present in person at the
meeting.
2.09. Notice of Meetings. Notice of each meeting of
the Board of Directors (unless otherwise provided in or
pursuant to Section 2.06 of these Bylaws) shall be given by
written notice delivered personally or mailed or given by
telephone or telegram to each director at his business
address or at such other address as such director shall have
designated in writing filed with the Corporate Secretary, in
each case not less than 6 hours prior thereto. If mailed,
such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to
the telegraph company; if by telephone, at the time the call
is completed. Whenever any notice whatever is required to be
given to any director of the corporation under the Articles
of Incorporation, Bylaws or any provision of law, a waiver
thereof in writing, signed at any time, whether before or
after the time of meeting, by the director entitled to such
notice, shall be deemed equivalent to the giving of such
notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where
a director attends a meeting and objects thereat to the
transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice or
waiver of notice of such meeting.
2.10. Quorum. Except as otherwise provided by the
Wisconsin Business Corporation Law or these Bylaws, a
majority of the number of directors as provided in or
pursuant to Section 2.01 shall constitute a quorum of the
Board of Directors, and a majority of the number of
directors appointed to serve on a committee shall constitute
a quorum of the committee. If at any meeting of the Board of
Directors or any committee thereof there shall be less than
a quorum present, a majority of the directors present may
adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have
been obtained, when any business may be transacted which
might have been transacted at the meeting as first convened
had there been a quorum.
2.11. Manner of Acting. The affirmative vote of a
majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors
or any committee thereof unless the affirmative vote of a
greater number is otherwise required by the Wisconsin
Business Corporation Law, the Articles of Incorporation, the
Bylaws or any provision of law.
2.12. Committees. The Board of Directors, by
resolution adopted by the affirmative vote of a majority of
all the directors then in office, may create one or more
committees, each committee to consist of two (2) or more
directors appointed by the Board of Directors to serve as
members of the committee, which to the extent provided in
the resolution as initially adopted, and as thereafter
supplemented or amended by further resolution adopted by a
like vote, may exercise the authority of the Board of
Directors. Notwithstanding the foregoing, no committee may:
(a) authorize distributions; (b) approve or propose to
stockholders action that the Wisconsin Business Corporation
Law requires be approved by stockholders; (c) fill vacancies
on the Board of Directors or any of its committees, except
that the Board of Directors may provide by resolution that
any vacancies on a committee shall be filled by the
affirmative vote of a majority of the remaining committee
members; (d) amend the Articles of Incorporation; (e) adopt,
amend or repeal Bylaws; (f) approve a plan of merger not
requiring stockholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or
method prescribed by the Board of Directors; or
(h) authorize or approve the issuance or sale or contract
for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or
series of shares, except within limits prescribed by the
Board of Directors.
Unless otherwise provided by the Board of Directors,
members of any committee shall serve at the pleasure of the
Board of Directors. The Board of Directors may elect one or
more of its members as alternate members of any such
committee who may take the place of any absent member or
members at any meeting of such committee, upon request by
the Chairman of the Board or upon request by the chairperson
of such meeting. Each such committee shall fix its own
rules (consistent with the Wisconsin Business Corporation
Law, the Articles of Incorporation and these Bylaws)
governing the conduct of its activities and shall make such
reports to the Board of Directors of its activities as the
Board of Directors may request. Unless otherwise provided by
the Board of Directors in creating a committee, a committee
may employ counsel, accountants and other consultants to
assist it in the exercise of authority.
The provisions of Section 2.09 shall also apply to
notice and waiver of notice of meetings of any committee of
the Board of Directors.
2.13. Compensation. The Board of Directors, by
affirmative vote of a majority of the directors then in
office, and irrespective of any personal interest of any of
its members, may (a) establish reasonable compensation of
all directors for services to the corporation as directors,
officers or otherwise, and the manner and time and payment
thereof, (b) provide for reasonable pensions, disability or
death benefits, and other benefits or payments, to
directors, officers and employees and to their estates,
families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees
to the corporation, and (c) provide for reimbursement of
reasonable expenses incurred in the performance of
directors' duties.
2.14. Presumption of Assent. A director who is
present and is announced as present at a meeting of the
Board of Directors or a committee thereof at which action on
any corporate matter is taken shall be presumed to have
assented to the action taken unless (a) the director objects
at the beginning of the meeting or promptly upon his or her
arrival to holding the meeting or transacting business at
the meeting, or (b) the director's dissent or abstention
from the action taken is entered in the minutes of the
meeting, or (c) the director delivers his or her written
notice of dissent or abstention to the presiding officer of
the meeting before the adjournment thereof or to the
corporation immediately after the adjournment of the
meeting, or (d) the director dissents or abstains from an
action taken, minutes of the meeting are prepared that fail
to show the director's dissent or abstention and the
director delivers to the corporation a written notice of
that failure promptly after receiving the minutes. Such
right to dissent or abstain shall not apply to a director
who voted in favor of an action.
2.15. Director Unanimous Consent Without a Meeting.
Any action required or permitted by the Articles of
Incorporation, these Bylaws or any provision of law to be
taken at a Board of Directors meeting or committee meeting
may be taken without a meeting if the action is taken by all
members of the Board or committee. The action shall be
evidenced by one or more written consents describing the
action taken, signed by each director and retained by the
corporation. Action taken hereunder is effective when the
last director signs the consent, unless the consent
specifies a different effective date. A consent signed
hereunder has the effect of a unanimous vote taken at a
meeting at which all directors or committee members were
present, and may be described as such in any document.
ARTICLE III.
OFFICERS
3.01. Appointment. The officers of the corporation
shall include a Chairman of the Board, a Vice Chairman of
the Board, a President, one or more Vice Presidents, a
Treasurer, a Corporate Secretary, and a Controller. The
Chairman of the Board, the Vice Chairman of the Board and
the officers designated by the Board of Directors as
"executive officers" for purposes of the Securities Exchange
Act of 1934 shall be appointed by the Board of Directors.
The Board of Directors shall also designate a Chief
Executive Officer, a Chief Operating Officer and a Chief
Financial Officer. Such other officers and assistant
officers as may be deemed necessary may be appointed by the
Board of Directors or the Chief Executive Officer. Any two
or more offices may be held by the same person.
3.02. Resignation and Removal. An officer shall hold
office until he or she resigns, dies, is removed hereunder,
or a different person is appointed to the office. An
officer may resign at any time by delivering an appropriate
written notice to the corporation. The resignation is
effective when the notice is delivered, unless the notice
specifies a later effective date and the corporation accepts
the later effective date. Any officer may be removed from
office by the affirmative vote of a majority of the whole
Board of Directors and, unless restricted by the Board of
Directors, any officer or assistant officer appointed by the
Chief Executive Officer may be removed by the Chief
Executive Officer, at any time, with or without cause and
notwithstanding the contract rights, if any, of the person
removed. Except as provided in the preceding sentence, the
resignation or removal is subject to any remedies provided
by any contract between the officer and the corporation or
otherwise provided by law. Appointment shall not of itself
create contract rights.
3.03. Vacancies. A vacancy in any office because of
death, resignation, removal or otherwise, may be filled by
the Board of Directors or the Chief Executive Officer, as
appropriate. The Board of Directors or the Chief Executive
Officer, as appropriate, may, from time to time, omit to
appoint one or more officers or may omit to fill a vacancy,
and in such case, the designated duties of such officer,
unless otherwise provided in these Bylaws, shall be
discharged by the Chief Executive Officer or such other
officers as he or she may designate.
3.04. Powers and Duties. Subject to such limitations
as the Board of Directors may from time to time prescribe,
the officers of the corporation shall each have such powers
and duties as described below, as well as such powers and
duties as from time to time may be conferred by the Chief
Executive Officer or the Board of Directors.
Chairman of the Board
The Chairman of the Board shall:
* preside at all meetings of the stockholders and of the
Board of Directors; and
* perform all other duties incident to the office of
Chairman of the Board and any other duties as may be
prescribed by the Board of Directors.
Vice Chairman of the Board
The Vice Chairman of the Board shall:
* consult with, provide advice to, and otherwise assist
the Chairman of the Board; and
* perform such duties and have such authority as may be
delegated to him by the Chairman of the Board or the Board
of Directors.
In the absence of the Chairman of the Board or in the event
of the Chairman of the Board's death, inability to act,
resignation or removal from office, or pursuant to Article V
("Emergency Provisions") of the Restated Articles of
Incorporation of the corporation, the powers and duties of
the Chairman of the Board shall for the time being devolve
upon and be exercised by the Vice Chairman of the Board,
unless otherwise ordered by the Board of Directors of the
corporation.
Chief Executive Officer
The Chief Executive Officer shall:
* subject to the control of the Board of Directors, in
general, manage, supervise, and control all of the business,
property and affairs of the corporation;
* have authority to appoint officers and assistant
officers of the corporation, subject to any limitations that
the Board of Directors may from time to time prescribe; it
being understood that the Board of Directors continues to
reserve its right to also appoint officers and assistant
officers and exclusive right to appoint officers designated
as "executive officers" for purposes of the Securities
Exchange Act of 1934, as provided in Section 3.01;
* have authority to confer powers and duties to other
officers and assistant officers, including the authority to
assign to the other officers the authority for the
management and control of the business and affairs of the
corporation, subject to any limitations as the Board of
Directors may from time to time prescribe;
* have all powers and duties of supervision and
management usually vested in the general manager of a
corporation, including the supervision and direction of all
other officers of the corporation;
* have authority to appoint agents and employees of the
corporation to hold office at the discretion of the Chief
Executive Officer; prescribe their powers, duties and
compensation, and delegate authority to them;
* have the authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, bonds,
stock certificates, contracts, leases, reports and all other
documents or instruments necessary or proper to be executed
in the course of the corporation's regular business, or
which shall be authorized by resolution of the Board of
Directors; and, except as otherwise provided by law or
directed by the Board of Directors, the Chief Executive
Officer may authorize any other officer or agent of the
corporation to sign, execute and acknowledge such documents
or instruments in his or her stead; and
* perform all other duties incident to the office of
Chief Executive Officer and any other duties as may be
prescribed by the Board of Directors.
President
The President shall:
* be the Chief Operating Officer of the corporation,
unless otherwise designated by the Board of Directors;
* subject to the control of the Chief Executive Officer,
direct certain operating functions; and
* perform the duties incident to the office of President
and any other duties as may be prescribed by the Chief
Executive Officer or the Board of Directors.
In the absence of the Chief Executive Officer or in the
event of the Chief Executive Officer's death, inability to
act, resignation or removal from office, or in the event for
any reason it shall be impracticable for the Chief Executive
Officer to act personally, the powers and duties of the
Chief Executive Officer shall for the time being devolve
upon and be exercised by the President, unless otherwise
ordered by the Board of Directors of the corporation.
Vice Presidents (including Executive Vice Presidents and
Senior Vice Presidents)
The Vice Presidents shall:
* perform such duties and have such authority as from
time to time may be delegated or assigned to them by the
Chief Executive Officer, President or the Board of
Directors; and
* to the extent not so delegated or assigned, they have
such duties and authority as generally pertain to their
office.
In case of the absence of the President or in the event of
the President's death, inability to act, resignation or
removal from office, or in the event for any reason it shall
be impracticable for the President to act personally, the
powers and duties of the President for the time being
devolve upon and be exercised by a Vice President (or, in
the event there be more than one Vice President, the Vice
Presidents in the order designated by the Chief Executive
Officer, or in the absence of any designation, then in the
order of their appointment, unless otherwise ordered by the
Board of Directors of the corporation).
Chief Financial Officer
The Chief Financial Officer shall:
* subject to the control of the Board of Directors and
the Chief Executive Officer, in general, manage, supervise,
and control all of the financial affairs of the corporation;
* have responsibility over the office of the Treasurer
and the Controller;
* designate agents and employees of the corporation to
(a) have charge and custody and be responsible for all funds
and securities of the corporation, (b) receive, disburse and
invest funds of the corporation (c) negotiate and borrow
short-term unsecured funds and to issue and sell commercial
paper and other types of short-term unsecured indebtedness
and (d) establish depository and checking accounts at banks
or other financial institutions for various corporate
purposes and act as signatories for such accounts; and
* in general perform all other duties incident to the
office of the Chief Financial Officer and have such other
duties and exercise such other authority as from time to
time may be delegated or assigned by the Chief Executive
Officer, President, Vice President in charge, if any, or the
Board of Directors.
Treasurer
The Treasurer, subject to the control of the Chief Financial
Officer, shall:
* have charge and custody of and be responsible for all
funds and securities of the corporation;
* receive, disburse and invest funds of the corporation,
and keep proper records thereof;
* negotiate and borrow short-term unsecured funds and
issue and sell commercial paper and other types of short-
term unsecured indebtedness;
* establish depository and checking accounts at banks or
other financial institutions for various corporate purposes;
it being understood that the Treasurer is hereby authorized
to take any action to administer these accounts, including
acting as a signatory with respect to such accounts; and
* in general perform all other duties incident to the
office of the Treasurer and have such other duties and
exercise such other authority as from time to time may be
delegated or assigned by Chief Executive Officer, President,
Chief Financial Officer, Vice President in charge, if any,
or the Board of Directors.
In the absence of the Chief Financial Officer or in the
event of the Chief Financial Officer's death, inability to
act, resignation or removal from office, or in the event for
any reason it shall be impracticable for the Chief Financial
Officer to act personally, the powers and duties of the
Chief Financial Officer shall for the time being devolve
upon and be exercised by the Treasurer, unless otherwise
ordered by the Board of Directors of the corporation.
In the absence of the Treasurer or in the event of the
Treasurer's death, inability to act, resignation or removal
from office, or in the event for any reason it shall be
impracticable for the Treasurer to act personally, the
powers and duties of the Treasurer shall for the time being
devolve upon and be exercised by the Assistant Treasurer,
unless otherwise ordered by the Board of Directors of the
corporation.
Corporate Secretary
The Corporate Secretary shall:
* keep (or cause to be kept) the minutes of the meetings
of the stockholders and of the Board of Directors and its
committees as permanent records;
* see that all notices are duly given in accordance with
the provisions of these Bylaws, or as required by law;
* be custodian of the corporate records and of the
corporate seal and see that the corporate seal is affixed to
all documents, the execution of which on behalf of the
corporation under its seal is duly authorized;
* keep or arrange for the keeping of a register of the
post office address of each stockholder, which shall be
furnished to the Corporate Secretary by such stockholder;
* sign, in accordance with provisions of these Bylaws,
certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board
of Directors;
* have general charge of the stock transfer books of the
Corporation; and
* perform all other duties incident to the office of
Corporate Secretary and have such other duties and exercise
such authority as from time to time may be delegated or
assigned by the Chief Executive Officer, President, Vice
President in charge, if any, or the Board of Directors.
In the absence of the Corporate Secretary or in the event of
the Corporate Secretary's death, inability to act,
resignation or removal from office, or in the event for any
reason it shall be impracticable for the Corporate Secretary
to act personally, the powers and duties of the Corporate
Secretary shall for the time being devolve upon and be
exercised by the Assistant Corporate Secretary, unless
otherwise ordered by the Board of Directors of the
corporation.
Controller
The Controller shall:
* be the principal accounting officer of the corporation,
unless otherwise designated by the Board of Directors;
* maintain proper audit control over the operations of
the corporation and be generally responsible for the
accounting system employed by the corporation;
* direct the budgetary control, general accounting, cost
accounting and statistical activities of the corporation;
* supervise activities in connection with credits and
collections, taxes and physical inventories;
* prepare and furnish reports and statements showing the
financial condition of the corporation as shall be required
by the Board of Directors, Chairman of the Board, Chief
Executive Officer or Chief Financial Officer; and
* in general perform all other duties incident to the
office of the Controller and have such other duties and
exercise such other authority as from time to time may be
delegated or assigned by the Chief Executive Officer,
President, Chief Financial Officer, Vice President in
charge, if any, or the Board of Directors.
3.05. Execution of Instruments. The execution of any
instrument of the corporation by any officer or assistant
officer shall be conclusive evidence, as to third parties,
of his or her authority to act on behalf of the corporation.
ARTICLE IV.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
4.01. Stock Certificates and Facsimile Signatures.
The certificates for shares of stock of the corporation
shall be signed either manually or by facsimile signature by
the Chief Executive Officer, the President or a Vice
President, and by the Corporate Secretary or an Assistant
Corporate Secretary of the corporation, or any other officer
or officers that the Board of Directors designates, and may
be sealed with the seal of the corporation.
The certificates for shares shall be countersigned and
registered either manually or by facsimile signature in such
manner, if any, as the Board of Directors may from time to
time prescribe. The transfer agent and the registrar may,
but need not be, the same person or agency. In the event
that the corporation or its agent is acting in the dual
capacity of transfer agent and registrar, a single manual or
facsimile signature may be used.
In case any such person acting as an officer, transfer
agent or registrar, who has signed, or whose facsimile
signature has been placed upon such certificate, shall have
ceased to be such officer, transfer agent or registrar,
before such certificate is issued, it may be used by the
corporation with the same effect as if such person had not
ceased to be such at the date of its issue.
4.02. Transfer of Stock. The shares of stock of the
corporation shall be transferable on the books of the
corporation upon request by the holders thereof or by duly
authorized attorney, upon surrender and cancellation of
certificates for a like number of shares of the same class
and series of stock, with duly executed assignment and power
of transfer endorsed thereon or attached thereto, and with
such proof of the authenticity of the signature as the
corporation or its agents may reasonably require.
Prior to due presentment of a certificate for shares
for registration of transfer the corporation may treat the
registered owner of such shares as the person exclusively
entitled to vote, to receive notifications and otherwise to
have and exercise all the rights and powers of an owner.
Where a certificate for shares is presented to the
corporation with a request to register for transfer, the
corporation shall not be liable to the owner or any other
person suffering loss as a result of such registration of
transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty
to inquire into adverse claims or has discharged any such
duty. The corporation may require reasonable assurance that
said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed
by or under the authority of the Board of Directors.
4.03. Lost, Destroyed or Stolen Certificates. Where
the owner claims that his certificate for shares has been
lost, destroyed or wrongfully taken, a new certificate shall
be issued in place thereof if the owner (a) so requests
before the corporation has notice that such shares have been
acquired by a bona fide purchaser, (b) files with the
corporation a sufficient indemnity bond and (c) satisfies
such other reasonable requirements as may be prescribed by
or under the authority of the Board of Directors.
4.04. Shares Without Certificates. The Board of
Directors may authorize the issuance of any shares of any of
its classes or series without certificates. The
authorization does not affect shares already represented by
certificates until the certificates are surrendered to the
corporation. Within a reasonable time after the issuance or
transfer of shares without certificates, the corporation
shall send the stockholder a written statement that includes
(1) all of the information required on share certificates
and (2) any transfer restrictions applicable to the shares.
ARTICLE V.
INDEMNIFICATION
5.01. Mandatory Indemnification. The corporation
shall 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 the
corporation, or is or was serving at the request of the
corporation 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.
5.02. Certain Definitions. As used in this
Article V, (a) "indemnify" includes the advancement of
expenses upon receipt of an undertaking to repay upon
specified conditions, (b) "fullest extent permitted by law"
means the fullest extent to which indemnity may lawfully be
provided by, pursuant to or consistently with, the
provisions of subsections (1) and (2) of Section 180.05 of
the Wisconsin Statutes (or any successor provision), a bylaw
under subsection (6) of that Section (or any successor
provision) or any other applicable law, whether statutory or
otherwise, (c) "person" includes the person's heirs,
executors and administrators, (d) "legal proceeding" means
any threatened, pending or completed action, suit or
proceeding, whether or not by or in right of the
corporation, (e) "other enterprise" includes any
corporation, partnership, joint venture, trust, dividend
reinvestment plan, stock purchase plan, employee benefit
plan or other plan or entity, (f) "expenses" include
expenses in the enforcement of rights under this Bylaw and
any excise taxes assessed with respect to an employee
benefit plan and (g) in respect of any of such plans,
(i) "serving at the request of the corporation as a director
or officer" includes serving at the request of the
corporation in any capacity that involves services or duties
with respect to the plan or its participants or
beneficiaries and (ii) action reasonably believed to be in
the interest of such participants or beneficiaries shall be
deemed reasonably believed to be in, or not opposed to, the
best interests of the corporation.
5.03. Legal Enforceability. The rights provided to
any person by the terms of this Article V shall be legally
enforceable against the corporation by such person, who
shall be presumed to have relied on the provisions of this
Article V in undertaking or continuing any of the positions
with the corporation or other enterprise referred to in
Section 5.01.
5.04. Limitation on Modification or Termination. No
modification or termination of this Article V shall be
effected which would impair any rights hereunder arising at
any time out of events occurring prior to such modification
or termination.
5.05. Non-Exclusive Bylaw. This Article V is not
intended be to exclusive and accordingly shall not be
construed as impairing in any way the power and authority of
the corporation, to the extent legally permissible without
regard to this Article V, in its discretion to indemnify or
agree to indemnify, or to purchase insurance indemnifying,
any employee, agent or other person.
ARTICLE VI.
OTHER INDEMNIFICATION PROVISIONS
6.01. Indemnification for Successful Defense. Within
twenty (20) days after receipt of a written request pursuant
to Section 6.03, the corporation shall indemnify a director
or officer, to the extent he or she has been successful on
the merits or otherwise in the defense of a proceeding, for
all reasonable expenses incurred in the proceeding if the
director or officer was a party because he or she is a
director or officer of the corporation.
6.02. Other Indemnification. (a) In cases not
included under Section 6.01, the corporation shall indemnify
a director or officer against all liabilities and expenses
incurred by the director or officer in a proceeding to which
the director or officer was a party because he or she is a
director or officer of the corporation, unless liability was
incurred because the director or officer breached or failed
to perform a duty he or she owes to the corporation and the
breach or failure to perform constitutes any of the
following:
(1) A willful failure to deal fairly with the
corporation or its stockholders in connection with a
matter in which the director or officer has a material
conflict of interest.
(2) A violation of criminal law, unless the
director or officer had reasonable cause to believe
that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful.
(3) A transaction from which the director or
officer derived an improper personal profit.
(4) Willful misconduct.
(b) Determination of whether indemnification is
required under this Section or Article V shall be made
pursuant to Section 6.05.
(c) The termination of a proceeding by judgment,
order, settlement or conviction, or upon a plea of no
contest or an equivalent plea, does not, by itself, create a
presumption that indemnification of the director or officer
is not required under this Section.
6.03. Written Request. A director or officer who
seeks indemnification under Article V or Sections 6.01 or
6.02 shall make a written request to the corporation.
6.04. Nonduplication. The corporation shall not
indemnify a director or officer under Sections 6.01 or 6.02
if the director or officer has previously received
indemnification or allowance of expenses from any person,
including the corporation, in connection with the same
proceeding. However, the director or officer has no duty to
look to any other person for indemnification.
6.05. Determination of Right to Indemnification.
(a) Unless otherwise provided by the Articles of
Incorporation or by written agreement between the director
or officer and the corporation, the director or officer
seeking indemnification under Article V or Section 6.02
shall select one of the following means for determining his
or her right to indemnification:
(1) By a majority vote of a quorum of the Board
of Directors consisting of directors not at the time
parties to the same or related proceedings. If a quorum
of disinterested directors cannot be obtained, by
majority vote of a committee duly appointed by the
Board of Directors and consisting solely of two (2) or
more directors who are not at the time parties to the
same or related proceedings. Directors who are parties
to the same or related proceedings may participate in
the designation of members of the committee.
(2) By independent legal counsel selected by a
quorum of the Board of Directors or its committee in
the manner prescribed in sub. (1) or, if unable to
obtain such a quorum or committee, by a majority vote
of the full Board of Directors, including directors who
are parties to the same or related proceedings.
(3) By a panel of three (3) arbitrators
consisting of one arbitrator selected by those
directors entitled under sub. (2) to select independent
legal counsel, one arbitrator selected by the director
or officer seeking indemnification and one arbitrator
selected by the two (2) arbitrators previously
selected.
(4) By an affirmative vote of shares represented
at a meeting of stockholders at which a quorum of the
voting group entitled to vote thereon is present.
Shares owned by, or voted under the control of, persons
who are at the time parties to the same or related
proceedings, whether as plaintiffs or defendants or in
any other capacity, may not be voted in making the
determination.
(5) By a court under Section 6.08.
(6) By any other method provided for in any
additional right to indemnification.
(b) In any determination under (a), the burden of
proof is on the corporation to prove by clear and convincing
evidence that indemnification under Article V or Section
6.02 should not be allowed.
(c) A written determination as to a director's or
officer's indemnification under Article V or Section 6.02
shall be submitted to both the corporation and the director
or officer within 60 days of the selection made under (a).
(d) If it is determined that indemnification is
required under Article V or Section 6.02, the corporation
shall pay all liabilities and expenses not prohibited by
Section 6.04 within ten (10) days after receipt of the
written determination under (c). The corporation shall also
pay all expenses incurred by the director or officer in the
determination process under (a).
6.06. Advance of Expenses. Within ten (10) days
after receipt of a written request by a director or officer
who is a party to a proceeding, the corporation shall pay or
reimburse his or her reasonable expenses as incurred if the
director or officer provides the corporation with all of the
following:
(1) A written affirmation of his or her good
faith belief that he or she has not breached or failed
to perform his or her duties to the corporation.
(2) A written undertaking, executed personally or
on his or her behalf, to repay the allowance to the
extent that it is ultimately determined under
Section 6.05 that indemnification under Article V or
Section 6.02 is not required and that indemnification
is not ordered by a court under Section 6.08(b)(2). The
undertaking under this subsection shall be an unlimited
general obligation of the director or officer and may
be accepted without reference to his or her ability to
repay the allowance. The undertaking may be secured or
unsecured.
6.07. Limitations on Indemnification. (a) Regardless
of the existence or rights under these Bylaws and additional
rights to indemnification under any agreement with the
corporation, the corporation shall not indemnify a director
or officer, or permit a director or officer to retain any
allowance of expenses, unless it is determined by or on
behalf of the corporation that the director or officer did
not breach or fail to perform a duty he or she owes to the
corporation which constitutes conduct under
Section 6.02(a)(1), (2), (3) or (4). A director or officer
who is a party to the same or related proceedings for which
indemnification or an allowance of expenses is sought may
not participate in a determination under this subsection.
(b) Sections 6.01 to 6.12 do not affect the
corporation's power to pay or reimburse expenses incurred by
a director or officer in any of the following circumstances.
(1) As a witness in a proceeding to which he or
she is not a party.
(2) As a plaintiff or petitioner in a proceeding
because he or she is or was an employee, agent,
director or officer of the corporation.
6.08. Court-Ordered Indemnification. (a) Except as
provided otherwise by written agreement between the director
or officer and the corporation, a director or officer who is
a party to a proceeding may apply for indemnification to the
court conducting the proceeding or to another court of
competent jurisdiction. Application shall be made for an
initial determination by the court under
Section 6.05(a)(5) or for review by the court of an adverse
determination under Section 6.05(a) (1), (2), (3), (4) or
(6). After receipt of an application, the court shall give
any notice it considers necessary.
(b) The court shall order indemnification if it
determines any of the following:
(1) That the director or officer is entitled to
indemnification under Article V or Sections 6.01 or
6.02.
(2) That the director or officer is fairly and
reasonably entitled to indemnification in view of all
the relevant circumstances, regardless of whether
indemnification is required under Article V or
Section 6.02.
(c) If the court determines under (b) that the
director or officer is entitled to indemnification, the
corporation shall pay the director's or officer's expenses
incurred to obtain the court-ordered indemnification.
6.09. Indemnification and Allowance of Expenses of
Employees and Agents. The corporation shall indemnify an
employee of the corporation who is not a director or officer
of the corporation, to the extent that he or she has been
successful on the merits or otherwise in defense of a
proceeding, for all reasonable expenses incurred in the
proceeding if the employee was a party because he or she was
an employee of the corporation. In addition, the corporation
may indemnify and allow reasonable expenses of an employee
or agent who is not a director or officer of the corporation
to the extent provided by the Articles of Incorporation or
these Bylaws, by general or specific action of the Board of
Directors or by contract.
6.10. Insurance. The corporation may purchase and
maintain insurance on behalf of an individual who is an
employee, agent, director or officer of the corporation
against liability asserted against or incurred by the
individual in his or her capacity as an employee, agent,
director or officer, regardless of whether the corporation
is required or authorized to indemnify or allow expenses to
the individual against the same liability under Article V or
Sections 6.01, 6.02, 6.06, 6.07 and 6.09.
6.11. Securities Law Claims. (a) Pursuant to the
public policy of the State of Wisconsin, the corporation
shall provide indemnification and allowance of expenses and
may insure for any liability incurred in connection with a
proceeding involving securities regulation described under
(b) to the extent required or permitted under Article V or
Sections 6.01 to 6.10.
(b) Article V and Sections 6.01 to 6.10 apply, to the
extent applicable to any other proceeding, to any proceeding
involving a federal or state statute, rule or regulation
regulating the offer, sale or purchase of securities,
securities brokers or dealers, or investment companies or
investment advisers.
6.12. Liberal Construction. In order for the
corporation to obtain and retain qualified directors,
officers and employees, the foregoing provisions shall be
liberally administered in order to afford maximum
indemnification of directors, officers and, where Section
6.09 of these Bylaws applies, employees. The indemnification
above provided for shall be granted in all applicable cases
unless to do so would clearly contravene law, controlling
precedent or public policy.
ARTICLE VII.
CONTRACTS, CHECKS, NOTES, BONDS, ETC.
7.01. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, to enter
into any contract or execute or deliver any document or
instrument, whether of conveyance or otherwise, in the name
of and on behalf of the corporation, and such authorization
may be general or confined to specific instances.
7.02. Checks, Drafts, Etc. All checks and drafts on
the corporation's bank accounts and all bills of exchange
and promissory notes, and all acceptances, obligations and
other instruments for the payment of money, shall be signed
or, in the case of wire transfers, shall be authorized by
such officer or officers, employee or employees or agent or
agents as shall be thereunto authorized from time to time by
the Board of Directors; provided that checks drawn on the
corporation's bank accounts may bear the facsimile signature
of such officer or officers, employee or employees, or agent
or agents as the Board of Directors shall authorize; and
provided further that in the case of notes, bonds or
debentures issued under a trust instrument of the
corporation and required to be signed by two officers of the
corporation, the signatures of either or both of such
officers may be in facsimile if specifically authorized and
directed by the Board of Directors of the corporation and if
such notes, bonds or debentures are required to be
authenticated by a corporate trustee which is a party to the
trust instrument. In case any such officer who has signed or
whose facsimile signature has been placed upon such
instrument shall have ceased to be such officer before such
instrument is issued, it may be issued by the corporation
with the same effect as if such officer had not ceased to be
such at the date of its issue.
ARTICLE VIII.
FISCAL YEAR
The fiscal year of the corporation shall begin on the
first day of January in each year and shall end on the
thirty-first day of December following.
ARTICLE IX.
CORPORATE SEAL
The corporate seal shall have inscribed thereon the
name of the corporation and the words "Corporate Seal,
June 26, 1981."
ARTICLE X.
EFFECT OF HEADINGS
The descriptive headings and references to Articles and
Sections in these Bylaws were formulated, used and inserted
herein for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions
hereof.
ARTICLE XI.
AMENDMENTS
11.01. By Stockholders. These Bylaws may be amended
or repealed and new Bylaws may be adopted by the
stockholders by the vote provided in Section 1.06 of these
Bylaws except as specifically provided below or in the
Articles of Incorporation. If authorized by the Articles of
Incorporation, the stockholders may adopt or amend a Bylaw
that fixes a greater or lower quorum requirement or a
greater voting requirement for stockholders or voting groups
of stockholders than otherwise is provided in the Wisconsin
Business Corporation Law. The adoption or amendment of a
Bylaw that adds, changes or deletes a greater or lower
quorum requirement or a greater voting requirement for
stockholders must meet the same quorum requirement and be
adopted by the same vote and voting groups required to take
action under the quorum and voting requirement then in
effect.
11.02. By Directors. Except as the Articles of
Incorporation may otherwise provide, these Bylaws may also
be amended or repealed and new Bylaws may be adopted by the
Board of Directors by the vote provided in Sections 2.10 and
2.11, but (a) no Bylaw adopted by the stockholders shall be
amended, repealed or readopted by the Board of Directors if
such Bylaw provides that it may not be amended, repealed or
readopted by the Board of Directors and (b) a Bylaw adopted
or amended by the stockholders that fixes a greater or lower
quorum requirement or a greater voting requirement for the
Board of Directors than otherwise is provided in the
Wisconsin Business Corporation Law may not be amended or
repealed by the Board of Directors unless the Bylaw
expressly provides that it may be amended or repealed by a
specified vote of the Board of Directors. Action by the
Board of Directors to adopt or amend a Bylaw that changes
the quorum or voting requirement for the Board of Directors
must meet the same quorum requirement and be adopted by the
same vote required to take action under the quorum and
voting requirement then in effect, unless a different voting
requirement is specified as provided by the preceding
sentence. A Bylaw that fixes a greater or lower quorum
requirement or a greater voting requirement for stockholders
or voting groups of stockholders than otherwise is provided
in the Wisconsin Business Corporation Law may not be
adopted, amended or repealed by the Board of Directors.
11.03. Implied Amendments. Any action taken or
authorized by the stockholders or by the Board of Directors,
which would be inconsistent with the Bylaws then in effect
but is taken or authorized by a vote that would be
sufficient to amend the Bylaws so that the Bylaws would be
consistent with such action, shall be given the same effect
as though the Bylaws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit
the specific action so taken or authorized.
11.04. Vote Required for Certain Amendments.
Notwithstanding anything in these Bylaws to the contrary,
the provisions of Section 1.09, Sections 2.01, 2.02, 2.04,
and 2.09, Article V and this Section 11.04, may be amended
only by the affirmative vote of at least 80% of the
aggregate number of votes which the holders of the then
outstanding shares of Common Stock and Preferred Stock,
voting together as a class, are entitled to cast in an
election of directors.
_______________________________
1 Effective June 26, 2000, the Board of Directors fixed the
number of directors at eleven.
Exhibit (10)-1a
WISCONSIN ENERGY CORPORATION
OMNIBUS STOCK INCENTIVE PLAN
EFFECTIVE DECEMBER 15, 1993
As amended May 19, 1998
WISCONSIN ENERGY CORPORATION
OMNIBUS STOCK INCENTIVE PLAN
1. Purpose. The purpose of the 1993 Omnibus Stock Incentive
Plan (the "Plan") is to enable Wisconsin Energy Corporation (the
"Company") to offer directors, officers and key employees of the
Company and its subsidiaries performance-based incentives and
other equity interests in the Company, thereby attracting,
retaining and rewarding such individuals and strengthening the
mutuality of interest between such individuals and the Company's
shareholders.
2. Administration. The Plan shall be administered by a
committee (the "Committee") which shall be the Compensation
Committee of the Board of Directors or another committee
consisting of not less than two directors of the Company
appointed by the Board of Directors who are not employees. It is
intended that the Committee members shall, at all times, qualify
as "non-employee" directors within the meaning of Securities and
Exchange Commission Regulation Section 240.16b-3 and as "outside
directors" within the meaning of Section 162(m) of the Internal
Revenue Code, as amended. However, the failure to so qualify
shall not affect the validity of any actions taken by the
Committee in accordance with the provisions of the Plan. If for
any reason the Committee does not qualify to administer the Plan,
the Board of Directors may appoint a new Committee so as to
comply.
3. Eligibility. Benefits under the Plan shall be granted only
to directors, officers and key employees of the Company and its
subsidiaries selected initially and from time-to-time thereafter
by the Committee on the basis of the special importance of their
services in the management, development and operations of the
Company and its subsidiaries.
4. Benefits. The benefits awarded under the Plan shall consist
of (a) stock options, (b) stock appreciation rights, (c) stock
awards, and (d) performance units. The Company may permit
selected participants to defer payments to them of some or all
types of benefits awarded under the Plan in accordance with
procedures established by the Committee which are intended to
permit such deferrals to comply with the applicable requirements
of the Internal Revenue Code.
5. Shares Reserved. There is hereby reserved for issuance
under the Plan an aggregate of 4,000,000 shares of common stock
of the Company which may be authorized but unissued, treasury, or
repurchased shares. All of such shares may, but need not, be
issued pursuant to the exercise of incentive stock options. The
maximum number of option shares which may be awarded to any
participant in any year during the term of the Plan is 100,000
shares. No more than 350,000 shares may be issued as stock
awards during the term of the Plan. If there is a lapse,
expiration, termination or cancellation of any option prior to
the issuance of shares thereunder or if shares are issued and
thereafter are reacquired by the Company pursuant to rights
reserved upon issuance thereof, those shares may again be used
for new awards under this Plan.
6. Stock Options. Stock options shall consist of options to
purchase shares of common stock of the Company and shall be
either incentive stock options or non-qualified stock options as
determined by the Committee. The option price shall be not less
than 100% of the fair market value of the shares on the date the
option is granted and the price may be paid by check or, in the
discretion of the Committee, by means of tendering, either
directly or by attestation, shares of common stock of the Company
then owned by the participant. Stock options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant;
provided, however, that no stock option shall be exercisable
prior to six months after the option grant date nor later than
ten years after the grant date. The aggregate fair market value
(determined as of the time the option is granted) of the shares
of common stock with respect to which incentive stock options are
exercisable for the first time by a participant during any
calendar year (under all option plans of the Company and its
subsidiaries) shall not exceed $100,000.
7. Stock Appreciation Rights. Stock appreciation rights may be
granted to the holder of any stock option granted hereunder and
shall be subject to such terms and conditions consistent with the
Plan as the Committee shall impose from time to time, including
the following:
(a) A stock appreciation right may be granted with
respect to a stock option at the time of its grant or
at any time thereafter up to six months prior to its
expiration.
(b) Stock appreciation rights will permit the holder
to surrender any related stock option or portion
thereof which is then exercisable and elect to receive
in exchange therefor cash in an amount equal to:
(i) The excess of the fair market value on the
date of such election of one share of
common stock over the option price,
multiplied by
(ii) The number of shares covered by such option
or portion thereof which is so surrendered.
(c) The Committee shall have the discretion to satisfy
a participant's right to receive the amount of cash
determined under paragraph (b) hereof in whole or in
part by the delivery of common stock of the Company
valued as of the date of the participant's election.
(d) In the event of the exercise of a stock
appreciation right, the number of shares reserved for
issuance hereunder shall be reduced by the number of
shares covered by the stock option or portion thereof
surrendered.
8. Stock Awards. Stock awards will consist of common stock
transferred to participants without other payment therefor as
additional compensation for their services to the Company or one
of its subsidiaries. A stock award shall be subject to such
terms and conditions as the Committee determines appropriate
including, without limitation, restrictions on the sale or other
disposition of such shares, the right of the Company to reacquire
such shares upon termination of the participant's employment
within specified periods and conditions requiring that the shares
be earned in whole or in part upon the achievement of performance
goals established by the Committee over a designated period of
time. The goals established by the Committee may include
earnings per share, total return on shareholder equity, or such
other goals as may be established by the Committee in its
discretion.
9. Performance Units. Performance units shall consist of
monetary units granted to participants which may be earned in
whole or in part if the Company achieves certain performance
goals established by the Committee over a designated period of
time. The initial performance units granted under the Plan will
be contingent dividend awards. The amount which a participant
can earn pursuant to a contingent dividend award will be
determined by reference to the actual dividends paid on a
specified number of shares of the Company's common stock for a
specified number of years. Part or all of the amount of
contingent dividend award will be paid to the participant if the
Company's total shareholder return (appreciation in the value of
its stock plus dividends) over a stated period of time compares
favorably to the return earned by other companies in the
Company's industry peer group, except that there will be no
payout if the Company's total shareholder return is negative over
the course of such period.
10. Non-transferability. Except as otherwise provided by the
Committee, stock options and other benefits granted under this
Plan shall not be transferable other than by will or the laws of
descent and distribution and each stock option and stock
appreciation right shall be exercisable during the participant's
lifetime only by the participant or the participant's guardian or
legal representative.
11. Change in Control. In the event of a change in control of
the Company, all outstanding stock options and stock appreciation
rights shall become immediately exercisable and all other
benefits shall immediately vest with all performance goals deemed
fully achieved. For these purposes, change in control shall mean
the occurrence of any of the following events, as a result of one
transaction or a series of transactions:
(a) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934,
but excluding the Company, its affiliates and any
qualified or non-qualified plan maintained by the
Company or its affiliates) becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under such
Act), directly or indirectly, of securities of the
Company representing more than 20% of the combined
voting power of the Company's then outstanding
securities;
(b) individuals who constitute a majority of the Board
of Directors of the Company immediately prior to a
contested election for positions on the Board cease to
constitute a majority as a result of such contested
election;
(c) the Company is combined (by merger, share
exchange, consolidation, or otherwise) with another
corporation and as a result of such combination, less
than 60% of the outstanding securities of the surviving
or resulting corporation are owned in the aggregate by
the former shareholders of the Company;
(d) the Company sells, leases, or otherwise transfers
all or substantially all of its properties or assets
not in the ordinary course of business to another
person or entity; or
(e) the Board of Directors determines in its sole and
absolute discretion that there has been a change in
control of the Company.
These change in control provisions shall apply to successive
changes in control on an individual transaction basis.
12. Other Provisions. The award of any benefit under the Plan
may also be subject to other provisions (whether or not
applicable to the benefit awarded to any other participant) as
the Committee determines appropriate, including such provisions
as may be required to comply with federal or state securities
laws and stock exchange requirements and understandings or
conditions as to the participant's employment.
13. Fair Market Value. The fair market value of the Company's
common stock at any time shall be determined in such manner as
the Committee may deem equitable or as required by applicable law
or regulation.
14. Adjustment Provisions.
(a) If the Company shall at any time change the number
of issued shares of common stock without new
consideration to the Company (such as by stock dividend
or stock split), the total number of shares reserved
for issuance under this Plan and the number of shares
covered by each outstanding benefit shall be adjusted
so that the aggregate consideration payable to or by
the Company, if any, shall not be changed.
(b) Notwithstanding any other provision of this Plan,
and without affecting the number of shares reserved or
available hereunder, the Board of Directors may
authorize the issuance or assumption of benefits in
connection with any merger, consolidation, acquisition
of property or stock, or reorganization upon such terms
and conditions as it may deem appropriate.
(c) In the event of any merger, consolidation or
reorganization of the Company with any other
corporation, there shall be substituted, on an
equitable basis as determined by the Committee, for
each share of common stock then reserved for issuance
under the Plan and for each share of common stock then
subject to a benefit granted under the Plan, the number
and kind of shares of stock, other securities, cash or
other property to which holders of common stock of the
Company will be entitled pursuant to the transaction.
15. Taxes. The Company shall be entitled to withhold the amount
of any tax attributable to any shares deliverable under the Plan
after giving the person entitled to receive the shares notice as
far in advance as practicable and the Company may defer making
delivery as to any benefit if any such tax is payable until
indemnified to its satisfaction. The Committee may, in its
discretion and subject to rules which it may adopt, permit a
participant to pay all or a portion of the taxes arising in
connection with any benefit under the Plan by electing to have
the Company withhold shares of common stock from the shares
otherwise deliverable to the participant, having a fair market
value equal to the amount to be withheld. Notwithstanding the
provisions of paragraph 5 above, any such withheld shares shall
not become available again for new awards under this Plan.
16. Term of Program; Amendment, Modification or Cancellation of
Benefits. No benefit shall be granted more than ten years after
the date of the approval of this Plan by the shareholders of the
Company; provided, however, that the terms and conditions
applicable to any benefits granted prior to such date may at any
time be amended, modified or canceled by mutual agreement between
the Committee and the participant or any other persons as may
then have an interest therein.
17. Amendment or Discontinuation of Plan. The Board of
Directors may amend the Plan at any time, provided that no such
amendment shall be effective unless approved within 12 months
after the date of the adoption of such amendment by the
affirmative vote of a majority of the shares present, or
represented, and entitled to vote at a meeting duly held if such
shareholder approval is required for the Plan to continue to
comply with the requirements of Securities and Exchange
Commission Regulation Section 240.16b-3. The Board of Directors
may suspend the Plan or discontinue the Plan at any time;
provided, however, that no such action shall adversely affect any
outstanding benefit.
18. Shareholder Approval. The Plan was adopted by the Board of
Directors on December 15, 1993, subject to shareholder approval.
The Plan and any benefits granted thereunder shall be null and
void if shareholder approval is not obtained within twelve months
of the adoption of the Plan by the Board of Directors.
Exhibit (10)-1b
WISCONSIN ENERGY CORPORATION
NON-QUALIFIED STOCK OPTION AWARD
THIS NON-QUALIFIED STOCK OPTION, dated the 3rd day of April,
2000, is granted by WISCONSIN ENERGY CORPORATION (the "Company"),
to Name (the "Employee") pursuant to the Company's 1993 Omnibus
Stock Incentive Program (the "Plan") as amended from time to
time.
WHEREAS, the Company believes it to be in the best interests of
the Company, its subsidiaries and its stockholders for its
officers and other key employees to obtain or increase their
stock ownership interest in the Company in order that they will
thus have a greater incentive to work for and manage the
Company's affairs in such a way that its shares may become more
valuable; and
WHEREAS, the Employee is employed by the Company or one of its
subsidiaries as an officer or key employee;
NOW, THEREFORE, in consideration of these premises and the
services to be performed by the Employee, the Company grants this
stock option to the Employee on the following terms and
conditions.
1. DEFINED TERMS
All capitalized terms used in this option and not otherwise
defined herein are defined in the attached Appendix or in the
Plan.
2. OPTION GRANT
The Company grants to the Employee an option to purchase a total
of NQ shares of common stock of the Company (the "Common Stock")
at an option price of $19.969 per share. This option is not
intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
3. VESTING OF OPTION
Except as otherwise provided herein, this option shall be
exercisable only prior to the Expiration Date (as defined in
paragraph 4), and then only as set forth in the following
schedule:
Years from Date of Option Grant % of Shares
Exercisable
Less than 1 0%
At least 1 but less than 2 25%
At least 2 but less than 3 50%
At least 3 but less than 4 75%
At least 4 100%
Notwithstanding the foregoing, this option shall become
immediately exercisable upon the occurrence of any of the
following events (the "Special Vesting Events"):
(i) the termination of the Employee's employment with the
Company or a subsidiary by reason of Retirement,
Disability or death,
(ii) the termination of the Employee's employment with the
Company or a subsidiary by reason of discharge without
Cause and not for reasons relating to performance,
(iii) any termination of the Employee's employment with the
Company or a subsidiary under circumstances entitling
the Employee to separation benefits under the Company's
Special Executive Severance Policy or Executive
Severance Policy, or
(iv) the occurrence of a Change in Control of the Company
while the Employee is employed by the Company or a
subsidiary.
Any unvested shares are immediately forfeited upon the Employee's
cessation of employment with the Company or a subsidiary prior to
the occurrence of a Special Vesting Event. However, the
Committee may, in its discretion, vest options upon separation.
4. TERM OF OPTION
All rights to exercise this option shall terminate on the
Expiration Date which is the earliest of the following dates:
(i) three months after the Employee's voluntary separation
from employment with the Company or a subsidiary prior
to the occurrence of a Special Vesting Event,
(ii) ten years from the date of grant after the Employee's
termination of employment with the Company or a
subsidiary on or after the occurrence of a Special
Vesting Event, or
(iii) ten years from the date of grant.
5. METHOD OF EXERCISE
This option may be exercised only by appropriate notice in
writing delivered to the Corporate Secretary of the Company and
accompanied by:
(i) a check payable to the order of the Company for the
full purchase price of the shares purchased, or
delivery of shares of Common Stock owned by the
Employee and acceptable to the Committee (or an
attestation of the Employee's ownership of such shares
in lieu of delivery) valued at fair market value on the
date of exercise, or some combination of a check and
use of such shares (and shares acquired in a prior
option exercise may not be used for this purpose until
the shares have been held by the Employee for six
months), and
(ii) such other documents or representations (and
satisfaction of any applicable tax withholding
obligations) as the Company may reasonably request in
order to comply with securities, tax or other laws then
applicable to the exercise of the option.
6. NON-TRANSFERABILITY; DEATH; DESIGNATED BENEFICIARY
This option is not transferable by the Employee otherwise than by
will or the laws of descent and distribution and is exercisable
during the Employee's lifetime only by the Employee. If the
Employee dies after termination of employment without any Special
Vesting Event having occurred but during the option period and
before the Expiration Date specified in paragraph 4 hereof, this
option may be exercised, to the extent otherwise vested, in whole
or in part and from time to time, in the manner described in
paragraph 5 hereof, by the Employee's "Designated Beneficiary"
(defined below) or if none or if the Designated Beneficiary does
not survive the Employee, by the Employee's estate or the person
to whom the option passes by will or the laws of descent and
distribution, but only within a period of (a) two years after the
Employee's death or (b) ten years from the date hereof, whichever
period is shorter. To the extent that this option may be
exercisable after the death of the Employee (whether before or
after termination of employment), this option may be exercised by
the "Designated Beneficiary" of the Employee. The "Designated
Beneficiary" shall be the beneficiary or beneficiaries designated
by the Employee in a writing filed with the Committee in such
form and at such time as the Committee may require. If a
deceased Employee fails to designate a beneficiary, or if the
Designated Beneficiary does not survive the Employee, any rights
that would have been exercisable by the Employee and any benefits
distributable to the Employee shall be exercised by or
distributed to the legal representative of Employee's estate or
the person to whom the option passes by will or by the laws of
descent and distribution. If a deceased Employee designates a
beneficiary and the Designated Beneficiary survives the Employee
but dies before the Designated Beneficiary's exercise of all
rights under this option or before complete distribution of
benefits to the Designated Beneficiary under this option, then
any rights that would have been exercisable by the Designated
Beneficiary shall be exercised by the legal representative of the
estate of the Designated Beneficiary, and any benefits
distributable to the Designated Beneficiary shall be distributed
to the legal representative of the estate of the Designated
Beneficiary.
7. REGISTRATION
If at any time during the option period the Company shall be
advised by its counsel that shares deliverable upon exercise of
the option are required to be registered under the Securities Act
of 1933 ("Act") or any state securities laws, or that delivery of
the shares must be accompanied or preceded by a prospectus
meeting the requirements of that Act or such state securities
laws, the Company will use its best efforts to effect the
registration or provide the prospectus not later than a
reasonable time following each exercise of this option, but
delivery of shares by the Company may be deferred until the
registration is effected or the prospectus is available. The
Employee shall have no interest in shares covered by this option
until certificates for the shares are issued, or in lieu of
certificates, shares are credited to the Employee's account in
the book-entry form.
8. ADJUSTMENTS
If the Company shall at any time change the number of shares of
its Common Stock without new consideration to the Company (such
as by stock dividend, stock split or similar transaction), the
total number of shares then remaining subject to purchase
hereunder shall be changed in proportion to the change in issued
shares and the option price per share shall be adjusted so that
the total consideration payable to the Company upon the purchase
of all shares not theretofore purchased shall not be changed. If
during the term of this option, the Common Stock of the Company
shall be changed into another kind of stock or into securities of
another corporation, cash, evidence of indebtedness, other
property or any combination thereof (the "Acquisition
Consideration"), whether as a result of reorganization, sale,
merger, consolidation, or other similar transaction, the
Committee shall cause adequate provision to be made whereby the
Employee shall thereafter be entitled to receive upon the due
exercise of this option the Acquisition Consideration the
Employee would have been entitled to receive for Common Stock
acquired through exercise of this option immediately prior to the
effective date of such transaction.
9. WITHHOLDING
Employee may satisfy any tax withholding obligations arising with
respect to the exercise of this option in whole or in part by
tendering a check to the Company for any required amount, by
election to have a portion of the shares that would otherwise be
issued withheld to defray all or a portion of any applicable
taxes, or by election to have the Company or its subsidiaries
withhold the required amounts from other compensation payable to
the Employee.
10. IMPACT ON OTHER BENEFITS
The income attributable to the exercise of this option shall not
be includable as compensation or earnings for purposes of any
other benefit plan or program offered by the Company or its
subsidiaries.
11. PLAN GOVERNS
Notwithstanding anything in this option, the terms of this option
shall be subject to the terms of the Plan, a copy of which may be
obtained by the Employee from the Secretary of the Company, and
this option is subject to all interpretations, amendments, rules
and regulations established by the Committee from time to time
pursuant to the Plan.
IN WITNESS WHEREOF, the Company has caused the execution hereof
by its duly authorized officer and Employee has agreed to the
terms and conditions of this option, all as of the date first
above written.
WISCONSIN ENERGY CORPORATION
By
---------------------------
Corporate Secretary
---------------------------
Name
APPENDIX
This is an appendix to a Wisconsin Energy Corporation
Incentive Stock Option Award (the "Agreement") dated April 3,
2000.
As used in the Agreement, the terms set forth below shall have
the following meanings:
(a) "Cause" means:
(i) the willful and continued failure of the Employee
to substantially perform the Employee's duties (other
than a failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered to the Employee by
the Board of Directors of the Company, the Compensation
Committee or an elected officer of the Company which
specifically identifies the manner in which the Board,
the Committee or the elected officer believes that the
Employee has not substantially performed the Employee's
duties, or
(ii) the willful engaging by the Employee in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company. However no act,
or failure to act, on the Employee's part shall be
considered "willful" unless done, or omitted to be
done, by the Employee not in good faith and without
reasonable belief that the Employee's action or
omission was in the best interest of the Company.
(b) "Disability" means separation from the service of the
Company or a subsidiary because of such illness or injury as
renders the Employee unable to perform the material duties
of the Employee's job.
(c) "Executive Severance Policy" and the "Special Executive
Severance Policy" means such Severance Policies as adopted
in connection with the acquisition by the Company of WICOR,
Inc. and as amended from time to time.
(d) "Retirement" means separation from the Service of the
Company or a subsidiary either at or after attainment of age
55 and completion of at least ten years of service or at or
after age 65.
Exhibit (10)-2a
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between WISCONSIN ENERGY
CORPORATION, a Wisconsin corporation (the "Company"), and GEORGE
E. WARDEBERG (the "Executive"), dated as of the 26th day of
April, 2000.
W I T N E S S E T H
WHEREAS, pursuant to an Agreement and Plan of Merger, dated
as of June 27, 1999, as amended (the "Merger Agreement"), among
the Company, WICOR, Inc. and CEW Acquisition, Inc., WICOR, Inc.
has become a wholly-owned subsidiary of the Company; and
WHEREAS, the Company further wishes to provide for the
employment by it of the Executive, and the Executive wishes to
serve the Company, in the capacities and on the terms and
conditions set forth in this Agreement:
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment Period. The Company shall employ the
Executive, and the Executive shall serve the Company, on the
terms and conditions set forth in this Agreement, for the period
(the "Employment Period") beginning at the Effective Time of
Merger as defined in the Merger Agreement (the "Effective Time")
and ending the last day of the 24th calendar month commencing on
or immediately after the Effective Time.
2. Position and Duties.
(a) The Executive shall serve as the Vice Chairman of
the Board of Directors of the Company (the "Board") during
the Employment Period, being consulted by the Chairman of
the Board and providing advice to the Chairman with respect
to the integration of the WICOR businesses with the Company
and the Company's organizational structure, staffing and
future business strategy, and with such duties and
responsibilities as are customarily assigned to such
position, and such other duties and responsibilities not
inconsistent therewith as may from time to time be assigned
to him by the Board or by the Chairman. The Executive shall
be a member of the Board on the first day of the Employment
Period and the Board shall propose the Executive for
re-election to the Board throughout the Employment Period.
(b) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote reasonable attention
and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
under this Agreement, use the Executive's reasonable best
efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry,
civic or charitable boards or committees, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
3. Compensation.
(a) Base Salary. The Executive's compensation during
the Employment Period shall be determined by the Board upon
the recommendation of the Compensation Committee of the
Board (the "Compensation Committee"), subject to the next
sentence and Section 3(b). During the Employment Period,
the Executive shall receive an annual base salary ("Annual
Base Salary") of not less than the greater of (i) his annual
base salary from WICOR, Inc. as in effect immediately before
the Effective Time or (ii) 90% of the base salary paid to
the Chairman of the Board of the Company during such period.
The Annual Base Salary shall be payable in accordance with
the Company's regular payroll practice for its senior
executives, as in effect from time to time. During the
Employment Period, the Annual Base Salary shall be reviewed
by the Compensation Committee for possible increase at least
annually. Any increase in the Annual Base Salary shall not
limit or reduce any other obligation of the Company under
this Agreement. The Annual Base Salary shall not be reduced
after any such increase, and the term "Annual Base Salary"
shall thereafter refer to the Annual Base Salary as so
increased.
(b) Incentive Compensation. During the Employment
Period, the Executive shall participate in short-term
incentive compensation plans and long-term incentive
compensation plans (the latter to consist of plans offering
stock options, restricted stock and other long-term
incentive compensation, as adopted and approved by the Board
or the Compensation Committee from time to time) providing
him with an opportunity to earn short-term and long-term
incentive compensation (the "Incentive Compensation") on a
basis commensurate with other senior officers of the
Company, subject to the next sentence hereof, provided that
he shall receive an initial grant of non-qualified stock
options covering 100,000 shares of Company stock as of the
start of the Employment Period with an exercise price equal
to the then fair market value, vesting over a 3-year period
at the rate of one-third (_) of such shares each year, based
on his continuation of service either as an officer or as a
director of the Company, to be exercisable over a 5-year
period, to the extent vested, after the later of his
cessation of service as an officer or director of the
Company. The Executive shall receive an annual award under
such short-term incentive plans at least equal to 90% of the
annual award made to the Chairman of the Board during the
Employment Period (prorated for any period of participation
in such plans which is for less than one full year, whether
at the inception or on termination of the Employment Period)
under such plans; provided, however, that in no event shall
the award be less than an amount which when added to the
Annual Base Salary is less on an annualized basis than the
salary and bonus actually received by the Executive from
WICOR, Inc. for the calendar year ending coincident with or
immediately prior to the Effective Date.
(c) Other Benefits. During the Employment Period and
thereafter: (1) the Executive shall be entitled to
participate in all applicable savings and retirement plans
(including non-qualified supplemental executive retirement
plans and specifically including Benefits A and B under the
Company's Supplemental Executive Retirement Plan),
practices, policies and programs of the Company to the same
extent as other senior executives of the Company, (2) the
Executive and/or the Executive's eligible dependents, as the
case may be, shall be eligible for participation in, and
shall receive all benefits under, all applicable welfare
benefit plans, practices, policies and programs provided by
the Company, other than severance plans, practices, policies
and programs but including, without limitation, medical,
prescription, dental, disability, employee life insurance,
group life insurance, accidental death and travel accident
insurance plans and programs, and retiree welfare benefits
on a basis commensurate with other long-term senior officers
of the Company and (3) the Executive shall be entitled to
past service credit under the Company's Supplemental
Executive Retirement Plan (the "SERP"), Benefit A,
calculated as if his participation in the Company's
tax-qualified defined benefit pension plan had commenced on
the first day of the month following his attainment of age
25 and as if the benefit formula under such pension plan for
all periods before December 31, 1995 was the same as that in
effect on December 31, 1995, and for all periods after
December 31, 1995, pursuant to the actual benefit formula
used in such pension plan (including the grandfathered
minimum benefit provisions thereof), offset by the actuarial
equivalent of any benefits payable to the Executive at age
65 or any later age at which such benefits commence from any
qualified or non-qualified defined benefit pension plans of
WICOR, Inc. Actuarial equivalency for this purpose shall be
determined using the interest rate and mortality table then
in use for determining optional forms of annuity under the
Company's tax-qualified defined benefit pension plan, or, if
Benefit A is to be payable in a lump sum, actuarial
equivalency shall be determined by using the interest rate
and mortality table referenced in Article VIII of the SERP.
(d) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to receive fringe benefits
on a basis commensurate with other senior officers of the
Company.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death
during the Employment Period. The Company shall be entitled
to terminate the Executive's employment because of the
Executive's Disability during the Employment Period.
"Disability" means that (i) the Executive has been unable,
for the period specified in the Company's disability plan
for senior executives, but not less than a period of 90
consecutive business days, to perform the Executive's duties
under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the
Company or its insurers, and acceptable to the Executive or
the Executive's legal representative, has determined that
the Executive is disabled within the meaning of the
applicable disability plan for senior executives. A
termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written
notice, and shall be effective on the 30th day after receipt
of such notice by the Executive (the "Disability Effective
Date"), unless the Executive returns to full-time
performance of the Executive's duties before the Disability
Effective Date.
(b) Termination by the Company.
(i) The Company may terminate the Executive's
employment during the Employment Period for
Cause or without Cause. "Cause" means the
willful and continued failure of the
Executive to substantially perform his duties
under this Agreement (other than as a result
of physical or mental injury) after the Board
delivers to the Executive a written demand
for substantial performance that specifically
identifies the manner in which the Board
believes that the Executive has not
substantially performed the Executive's
duties, or illegal or gross misconduct by the
Executive in connection with his employment
by the Company, in either case that is
willful and results in material and
demonstrable damage to the business or the
reputation of the Company. No act or failure
to act on the part of the Executive shall be
considered "willful" unless it is done, or
omitted to be done, by the Executive in bad
faith or without reasonable belief that the
Executive's action or omission was in the
best interests of the Company. Any act or
failure to act that is based upon authority
given pursuant to a resolution duly adopted
by the Board, or the advice of counsel for
the Company, shall be conclusively presumed
to be done, or omitted to be done, by the
Executive in good faith and in the best
interests of the Company.
(ii) A termination of the Executive's employment
for Cause shall not be effective unless it is
accomplished in accordance with the following
procedures. The Company shall give the
Executive written notice ("Notice of
Termination for Cause") of its intention to
terminate the Executive's employment for
Cause, setting forth in reasonable detail the
specific conduct of the Executive that it
considers to constitute Cause and the
specific provision(s) of this Agreement on
which it relies, and stating the date, time
and place of the Special Board Meeting for
Cause. The "Special Board Meeting for Cause"
means a meeting of the Board called and held
specifically for the purpose of considering
the Executive's termination for Cause, that
takes place not less than 10 nor more than 20
business days after the Executive receives
the Notice of Termination for Cause. The
Executive shall be given an opportunity,
together with counsel, to be heard at the
Special Board Meeting for Cause. The
Executive's termination for Cause shall be
effective when and if a resolution is duly
adopted at the Special Board Meeting for
Cause by affirmative vote of a majority of
the entire membership of the Board, excluding
employee directors, stating that, in the good
faith opinion of the Board, the Executive is
guilty of the conduct described in the Notice
of Termination for Cause and that such
conduct constitutes Cause under this
Agreement.
(c) Good Reason.
(i) The Executive may terminate employment for
Good Reason or without Good Reason. "Good
Reason" means:
A. the assignment to the Executive of any
duties or responsibilities inconsistent in any
respect with Section 2(a) of this Agreement, or
any other action by the Company that results in a
diminution in the Executive's position, authority,
duties or responsibilities, other than an
isolated, insubstantial and inadvertent action
that is not taken in bad faith and is remedied by
the Company promptly after receipt of notice
thereof from the Executive;
B. any failure by the Company to comply
with any provision of Section 3 of this Agreement,
other than an isolated, insubstantial and
inadvertent failure that is not taken in bad faith
and is remedied by the Company promptly after
receipt of notice thereof from the Executive;
C. any requirement by the Company that the
Executive's services be rendered primarily at a
location or locations other than the Milwaukee,
Wisconsin general metropolitan area.
D. any failure by the Company to comply
with paragraph (c) of Section 10 of this
Agreement; or
E. any other substantial breach of this
Agreement by the Company that is not remedied by
the Company promptly after receipt of notice
thereof from the Executive.
(ii) A termination of employment by the Executive
for Good Reason shall be effectuated by
giving the Company written notice ("Notice of
Termination for Good Reason") of the
termination, setting forth in reasonable
detail the specific conduct of the Company
that constitutes Good Reason and the specific
provision(s) of this Agreement on which the
Executive relies. A termination of
employment by the Executive for Good Reason
shall be effective on the 5th business day
following the date when the Notice of
Termination for Good Reason is given, unless
the notice sets forth a later date (which
date shall in no event be later than 30 days
after the notice is given).
(iii) A termination of the Executive's
employment by the Executive without Good
Reason shall be effected by giving the
Company written notice of the termination.
(d) The failure to set forth any fact or circumstance
in a Notice of Termination for Cause or a Notice of
Termination for Good Reason shall not constitute a waiver of
the right to assert, and shall not preclude the party giving
notice from asserting, such fact or circumstance in an
attempt to enforce any right under or provision of this
Agreement.
(e) Date of Termination. The "Date of Termination"
means the date of the Executive's death, the Disability
Effective Date, the date on which the termination of the
Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, or
the date on which the Executive gives the Company notice of
a termination of employment without Good Reason, as the case
may be.
5. Obligations of the Company Upon Termination.
(a) Other Than For Cause, Death or Disability, or For
Good Reason. If, during the Employment Period, the Company
terminates the Executive's employment for any reason other
than Cause, death or Disability, or the Executive terminates
employment for Good Reason, the Company shall continue to
provide the Executive with the compensation and benefits set
forth in paragraphs (a), (b) and (c) of Section 3 and the
continuing protection of Section 5(d) as if he had remained
employed by the Company through the end of the Employment
Period and then retired. The Incentive Compensation for
such period shall be equal to the maximum Incentive
Compensation that the Executive would have been eligible to
earn for such period. In lieu of stock options, restricted
stock and other stock-based awards, the Executive shall be
paid cash equal to the fair market value (without regard to
any restrictions) of the stock options, restricted stock and
other stock-based awards that would otherwise have been
granted. To the extent that any benefits described in
Section 3(c) cannot be provided pursuant to the plan or
program provided by the Company for its executives, the
Company shall provide such benefits outside such plan or
program at no additional cost (including without limitation
tax cost) to the Executive and his family. Finally, during
any period when the Executive is eligible to receive
medical, prescription or dental benefits under another
employer-provided plan, the benefits provided by the Company
under this Section 5(a) may be made secondary to those
provided under such other plan. In addition to the
foregoing, any restricted stock outstanding on the Date of
Termination and all options outstanding on the Date of
Termination shall be fully vested and exercisable and shall
remain in effect and exercisable until the end of the
Employment Period (absent the prior death of the Executive)
as if the Executive remained employed until then and shall
thereafter remain exercisable in accordance with the
applicable terms respecting retired employees. The payments
and benefits provided pursuant to this Section 5(a) are
intended as liquidated damages for a termination of the
Executive's employment by the Company other than for Cause
or Disability or for the actions of the Company leading to a
termination of the Executive's employment by the Executive
for Good Reason, and shall be the sole and exclusive remedy
therefor.
(b) Death and Disability. If the Executive's
employment is terminated by reason of the Executive's death
or Disability during the Employment Period, the Company
shall pay to the Executive or, in the case of the
Executive's death, to the Executive's designated
beneficiaries (or, if there is no such beneficiary, to the
Executive's estate or legal representative), in a lump sum
in cash within 30 days after the Date of Termination, the
sum of the following amounts (the "Accrued Obligations"):
(1) any portion of the Executive's Annual Base Salary
through the Date of Termination that has not yet been paid;
(2) an amount equal to the product of (A) the maximum annual
bonus that the Executive would have been eligible to earn
for the period during which such termination occurs, and (B)
a fraction, the numerator of which is the number of days in
such period through the Date of Termination, and the
denominator of which is the total number of days in the
relevant period; and (3) any accrued but unpaid Incentive
Compensation and vacation pay. The Company shall have no
further obligations under this Agreement, except as
specified in Section 5(d) which shall continue to apply and
in Section 6 below.
(c) By the Company For Cause; By the Executive Other
Than For Good Reason. If the Executive's employment is
terminated by the Company for Cause during the Employment
Period, the Company shall pay to the Executive the Annual
Base Salary through the Date of Termination and all
compensation and benefits payable to the Executive under the
terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior to
the Date of Termination. If the Executive voluntarily
terminates employment during the Employment Period other
than for Good Reason, the Executive shall have no liability
to the Company for breach of this Agreement and the Company
shall pay the Accrued Obligations to the Executive in a lump
sum in cash within 30 days of the Date of Termination and
the Company shall have no further obligations under this
Agreement, except as specified in Section 6 below; provided
that if such voluntary termination by the Executive occurs
after completion of six months of service, but not
otherwise, Section 5(d) shall also continue to apply.
(d) Certain Increase in Payments.
(i) Notwithstanding any other provision of this
Agreement, if any portion of any payment
under this Agreement, or under any other
agreement with or plan of the Company or its
affiliates (in the aggregate "Total
Payments"), would constitute an "excess
parachute payment," Executive shall be paid
an additional amount (the "Gross-Up Payment")
such that the net amount retained by
Executive after deduction of any excise tax
imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the
"Code"), any interest charges or penalties in
respect of the imposition of such excise tax
(but not any federal, state or local income
tax, or employment tax) on the Total
Payments, any federal, state and local income
tax, employment tax, and excise tax upon the
payment provided for by this paragraph (i) of
Section 5(d), shall be equal to the Total
Payments. For purposes of determining the
amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income tax and
employment taxes at the highest marginal rate
of federal income and employment taxation in
the calendar year in which the Gross-Up
Payment is to be made and state and local
income taxes at the highest marginal rate of
taxation in the state and locality of
Executive's domicile for income tax purposes
on the date the Gross-Up Payment is made, net
of the maximum reduction in federal income
taxes that may be obtained from the deduction
of such state and local taxes.
(ii) For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payments" shall have
the meanings assigned to them in Section 280G of the
Code and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this
Agreement shall be calculated in accordance with
Section 1274(b)(2) of the Code (or any successor
provision). Within 20 business days following notice
from either party to the other of the belief that there
is a payment or benefit due the Executive which will
result in an excess parachute payment as defined in
Section 280G of the Code, the Executive and the
Company, at the Company's expense, shall obtain the
opinion (which need not be unqualified) of nationally
recognized tax counsel ("National Tax Counsel")
selected by the Company's independent auditors and
reasonably acceptable to the Executive (which may be
regular outside counsel to the Company), which opinion
sets forth (i) the amount of the Base Period Income,
(ii) the amount and present value of Total Payments and
(iii) the amount and present value of any excess
parachute payments. As used in this Agreement, the
term "Base Period Income" means an amount equal to the
Executive's "annualized includible compensation for the
base period" as defined in Section 280G(d)(1) of the
Code. For purposes of such opinion, the value of any
noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent
auditors in accordance with the principles of
Section 280G(d)(3) and (4) of the Code (or any
successor provisions), which determination shall be
evidenced in a certificate of such auditors addressed
to the Company and the Executive. The opinion of
National Tax Counsel shall be addressed to the Company
and the Executive and shall be binding upon the Company
and the Executive. If such National Tax Counsel so
requests in connection with the opinion required by
this paragraph (ii) of Section 5(d), the Executive and
the Company shall obtain the advice of a firm of
recognized executive compensation consultants as to the
reasonableness of any item of compensation to be
received by the Executive solely with respect to its
status under Section 280G of the Code and the
regulations thereunder. Within 5 days after the
National Tax Counsel's opinion is received by the
Company and the Executive, the Company shall pay (or
cause to be paid) or distribute (or cause to
distribute) to or for the benefit of Executive such
amounts as are then due to Executive under this
Agreement.
(iii)In the event that upon any audit by the Internal
Revenue Service, or by a state or local taxing
authority, of the Total Payments or Gross-Up Payment, a
change is finally determined to be required in the
amount of taxes paid by Executive, appropriate
adjustments shall be made under this Agreement such
that the net amount which is payable to the Executive
after taking into account the provisions of
Section 4999 of the Code shall reflect the intent of
the parties as expressed in paragraph (i) above, in the
manner determined by the National Tax Counsel.
(iv) The Company agrees to bear all costs associated with,
and to indemnify and hold harmless, the National Tax
Counsel of and from any and all claims, damages, and
expenses resulting from or relating to its
determinations pursuant to paragraphs (ii) and (iii)
above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of such
firm.
6. Non-Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies for which the
Executive may qualify, nor, subject to Section 11(f), shall
anything in this Agreement limit or otherwise affect such rights
as the Executive may have under any contract or agreement with
the Company or any of its affiliated companies. However, the Key
Executive Employment and Severance Agreement between WICOR, Inc.
and the Executive dated as of July 1, 1997 is expressly
terminated as a result of the execution of this Agreement and the
Executive hereby waives all rights thereunder. Vested benefits
and other amounts that the Executive is otherwise entitled to
receive under the Incentive Compensation, the SERP (including the
SERP benefits described in Section 3(c)(1) and (3)), or any other
plan, policy, practice or program of, or any contract or
agreement with, the Company or any of its affiliated companies on
or after the Date of Termination shall be payable in accordance
with the terms of each such plan, policy, practice, program,
contract or agreement, as the case may be, except as explicitly
modified by this Agreement.
7. Full Settlement. The Company's obligation to make the
payments provided for in, and otherwise to perform its
obligations under, this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right
or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions
of this Agreement and, except as specifically provided in Section
5(a), such amounts shall not be reduced, regardless of whether
the Executive obtains other employment.
8. Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the
Company or any of its affiliated companies and their respective
businesses that the Executive obtains during the Executive's
employment by the Company or any of its affiliated companies and
that is not public knowledge (other than as a result of the
Executive's violation of this Section 8) ("Confidential
Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after
the Executive's employment with the Company, except with the
prior written consent of the Company or as otherwise required by
law or legal process. In no event shall any asserted violation
of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
9. Attorneys' Fees. The Company agrees to pay, as
incurred, to the fullest extent permitted by law, all legal fees
and expenses that the Executive may reasonably incur as a result
of any contest (regardless of the outcome) by the Company, the
Executive or others of the validity or enforceability of or
liability under, or otherwise involving, any provision of this
Agreement, together with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code.
10. Successors.
(a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not
be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company expressly to assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform
it if no such succession had taken place. As used in this
Agreement, "Company" shall mean both the Company as defined
above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
11. Miscellaneous.
(a) This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement
may not be amended or modified except by a written agreement
executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications under this
Agreement shall be in writing and shall be given by hand
delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive: George E. Wardeberg
(Home address)
With a Copy to: Foley & Lardner
Attn: Joseph B. Tyson, Jr.
777 East Wisconsin Avenue
Milwaukee WI 53202
Fax No.: (414) 297-4900
If to the Company: Wisconsin Energy Corporation
Attn: Calvin H. Baker,
Treasurer
P.O. Box 2949
231 West Michigan Street
Milwaukee, WI 53201
Fax No.: (414) 221-5068
With a Copy to: Quarles & Brady LLP
Attn: Patrick M. Ryan
411 East Wisconsin Avenue
Milwaukee, WI 53202
Fax No.: (414) 271-3552
or to such other address as either party furnishes to the other
in writing in accordance with this paragraph (b) of Section 11.
Notices and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement. If
any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such
provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue
in full force and effect to the fullest extent consistent
with law.
(d) Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable
under this Agreement all federal, state, local and foreign
taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provisions of, or to assert,
any right under, this Agreement (including, without
limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of
Section 4 of this Agreement ) shall not be deemed to be a
waiver of such provision or right or of any other provision
of or right under this Agreement.
(f) The Executive and the Company acknowledge that
this Agreement supersedes any other agreement between them
concerning the subject matter hereof.
(g) The rights and benefits of the Executive under
this Agreement may not be anticipated, assigned, alienated
or subject to attachment, garnishment, levy, execution or
other legal or equitable process except as required by law.
Any attempt by the Executive to anticipate, alienate,
assign, sell, transfer, pledge, encumber or charge the same
shall be void. Payments hereunder shall not be considered
assets of the Executive in the event of insolvency or
bankruptcy.
(h) This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and
said counterparts shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of its Board,
the Company has caused this Agreement to be executed in its name
on its behalf, all as of the day and year first above written.
EXECUTIVE
/s/ George E. Wardeberg
---------------------------------
George E. Wardeberg
WISCONSIN ENERGY CORPORATION
By:/s/ Richard A. Abdoo
---------------------------------
Richard A. Abdoo
Chairman of the Board,
President and Chief Executive
Officer
Exhibit (10)-2b
WISCONSIN ENERGY CORPORATION
NON-QUALIFIED STOCK OPTION AWARD
THIS NON-QUALIFIED STOCK OPTION, dated the 26th day of
April, 2000, is granted by WISCONSIN ENERGY CORPORATION (the
"Company"), to GEORGE E. WARDEBERG (the "Employee") pursuant to
the Company's 1993 Omnibus Stock Incentive Program (the "Plan")
as amended from time to time.
WHEREAS, the Company believes it to be in the best interests
of the Company, its subsidiaries and its stockholders for its
officers and other key employees to obtain or increase their
stock ownership interest in the Company in order that they will
thus have a greater incentive to work for and manage the
Company's affairs in such a way that its shares may become more
valuable; and
WHEREAS, the Employee is employed by the Company or one of
its subsidiaries as an officer and also is serving as a director
of the Company;
NOW, THEREFORE, in consideration of these premises and the
services to be performed by the Employee, the Company grants this
stock option to the Employee on the following terms and
conditions.
1. DEFINED TERMS
All capitalized terms used in this option and not otherwise
defined herein are defined in the attached Appendix or in the
Plan.
2. OPTION GRANT
The Company grants to the Employee an option to purchase a
total of 100,000 shares of common stock of the Company (the
"Common Stock") at an option price of $22.688 per share. This
option is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
3. VESTING OF OPTION
Except as otherwise provided herein, this option shall be
exercisable only prior to the Expiration Date (as defined in
paragraph 4), and then only as set forth in the following
schedule:
Years of Service as either Officer or % of Shares
Director from Date Option Granted Exercisable
Less than 1 0%
At least 1 but less than 2 33.3%
At least 2 but less than 3 66.6%
At least 3 100%
Notwithstanding the foregoing, this option shall become
immediately exercisable upon the occurrence of any of the
following events (the "Special Vesting Events"):
(i) the termination of the Employee's employment with
or service as a director of the Company or a subsidiary
by reason of Disability or death,
(ii) the termination of the Employee's employment with
the Company or a subsidiary by reason of discharge
without Cause,
(iii) a Good Reason Termination by the Employee, or
(iv) the occurrence of a Change in Control of the
Company while the Employee is employed by or serving as
a director of the Company or a subsidiary.
Any unvested shares are immediately forfeited upon the
later of the Employee's cessation of employment with or
service as a director of the Company or a subsidiary
prior to the occurrence of a Special Vesting Event.
However, the Committee may, in its discretion, vest
options upon separation.
4. TERM OF OPTION
All rights to exercise this option, to the extent vested,
shall terminate on the Expiration Date which is the earlier of
the following dates:
(i) five years after the later of the Employee's cessation
of service either as an officer or a director of the
Company,
(ii) ten years from the date of grant.
5. METHOD OF EXERCISE
This option may be exercised only by appropriate notice in
writing delivered to the Corporate Secretary of the Company and
accompanied by:
(i) a check payable to the order of the Company for the
full purchase price of the shares purchased, or delivery of
shares of Common Stock owned by the Employee and acceptable
to the Committee (or an attestation of the Employee's
ownership of such shares in lieu of delivery) valued at fair
market value on the date of exercise, or some combination of
a check and use of such shares (and shares acquired in a
prior option exercise may not be used for this purpose until
the shares have been held by the Employee for six months),
and
(ii) such other documents or representations (and
satisfaction of any applicable tax withholding obligations)
as the Company may reasonably request in order to comply
with securities, tax or other laws then applicable to the
exercise of the option.
6. NON-TRANSFERABILITY; DEATH; DESIGNATED BENEFICIARY
This option is not transferable by the Employee otherwise
than by will or the laws of descent and distribution and is
exercisable during the Employee's lifetime only by the Employee.
If the Employee dies after termination of employment and
cessation of service as a director without any Special Vesting
Event having occurred but during the option period and before the
Expiration Date specified in paragraph 4 hereof, this option may
be exercised, to the extent otherwise vested, in whole or in part
and from time to time, in the manner described in paragraph 5
hereof, by the Employee's "Designated Beneficiary" (defined
below) or if none or if the Designated Beneficiary does not
survive the Employee, by the Employee's estate or the person to
whom the option passes by will or the laws of descent and
distribution, but only within the period specified in paragraph
4. To the extent that this option is exercisable after the death
of the Employee, this option may be exercised by the "Designated
Beneficiary" of the Employee. The "Designated Beneficiary" shall
be the beneficiary or beneficiaries designated by the Employee in
a writing filed with the Committee in such form and at such time
as the Committee may require. If a deceased Employee fails to
designate a beneficiary, or if the Designated Beneficiary does
not survive the Employee, any rights that would have been
exercisable by the Employee and any benefits distributable to the
Employee shall be exercised by or distributed to the legal
representative of Employee's estate or the person to whom the
option passes by will or by the laws of descent and distribution.
If a deceased Employee designates a beneficiary and the
Designated Beneficiary survives the Employee but dies before the
Designated Beneficiary's exercise of all rights under this option
or before complete distribution of benefits to the Designated
Beneficiary under this option, then any rights that would have
been exercisable by the Designated Beneficiary shall be exercised
by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of
the estate of the Designated Beneficiary.
7. REGISTRATION
If at any time during the option period the Company shall be
advised by its counsel that shares deliverable upon exercise of
the option are required to be registered under the Securities Act
of 1933 ("Act") or any state securities laws, or that delivery of
the shares must be accompanied or preceded by a prospectus
meeting the requirements of that Act or such state securities
laws, the Company will use its best efforts to effect the
registration or provide the prospectus not later than a
reasonable time following each exercise of this option, but
delivery of shares by the Company may be deferred until the
registration is effected or the prospectus is available. The
Employee shall have no interest in shares covered by this option
until certificates for the shares are issued, or in lieu of
certificates, shares are credited to the Employee's account in
the book-entry form.
8. ADJUSTMENTS
If the Company shall at any time change the number of shares
of its Common Stock without new consideration to the Company
(such as by stock dividend, stock split or similar transaction),
the total number of shares then remaining subject to purchase
hereunder shall be changed in proportion to the change in issued
shares and the option price per share shall be adjusted so that
the total consideration payable to the Company upon the purchase
of all shares not theretofore purchased shall not be changed. If
during the term of this option, the Common Stock of the Company
shall be changed into another kind of stock or into securities of
another corporation, cash, evidence of indebtedness, other
property or any combination thereof (the "Acquisition
Consideration"), whether as a result of reorganization, sale,
merger, consolidation, or other similar transaction, the
Committee shall cause adequate provision to be made whereby the
Employee shall thereafter be entitled to receive upon the due
exercise of this option the Acquisition Consideration the
Employee would have been entitled to receive for Common Stock
acquired through exercise of this option immediately prior to the
effective date of such transaction.
9. WITHHOLDING
Employee may satisfy any tax withholding obligations arising
with respect to the exercise of this option in whole or in part
by tendering a check to the Company for any required amount, by
election to have a portion of the shares that would otherwise be
issued withheld to defray all or a portion of any applicable
taxes, or by election to have the Company or its subsidiaries
withhold the required amounts from other compensation payable to
the Employee.
10. IMPACT ON OTHER BENEFITS
The income attributable to the exercise of this option shall
not be includable as compensation or earnings for purposes of any
other benefit plan or program offered by the Company or its
subsidiaries.
11. PLAN GOVERNS
Notwithstanding anything in this option, the terms of this
option shall be subject to the terms of the Plan, a copy of which
may be obtained by the Employee from the Secretary of the
Company, and this option is subject to all interpretations,
amendments, rules and regulations established by the Committee
from time to time pursuant to the Plan.
IN WITNESS WHEREOF, the Company has caused the execution
hereof by its duly authorized officer and Employee has agreed to
the terms and conditions of this option, all as of the date first
above written.
WISCONSIN ENERGY CORPORATION
By
---------------------------
Corporate Secretary
---------------------------
George E. Wardeberg
APPENDIX
This is an appendix to a Wisconsin Energy Corporation Non-
Qualified Stock Option Award (the "Agreement") dated April 26,
2000.
As used in the Agreement, the terms set forth below shall
have the following meanings:
(a) "Cause" means "Cause" as defined in Section 4(b)(i) of
the Employment Agreement. Any termination of the
Employee for Cause may be accomplished only in
accordance with the procedures specified in Section
4(b)(ii) of the Employment Agreement.
(b) "Disability" means "Disability" as defined in Section
4(a) of the Employment Agreement.
(c) "Employment Agreement" means the Employment Agreement
between the Employee and the Company dated April 26,
2000. The terms of the Employment Agreement are hereby
incorporated by reference.
(d) "Good Reason Termination" means a termination of
employment by the Employee for "Good Reason" as defined
in and subject to the provisions contained in Section
4(c) of the Employment Agreement.
Exhibit (10)-3
WISCONSIN ENERGY CORPORATION
AMENDED AND RESTATED
SPECIAL EXECUTIVE SEVERANCE POLICY
Introduction
Wisconsin Energy Corporation, a Wisconsin corporation
("Wisconsin Energy") has entered into an Agreement and Plan of
Merger dated as of June 27, 1999, as amended (the "Merger
Agreement") among Wisconsin Energy, WICOR, Inc. and CEW
Acquisition, Inc. whereby WICOR, Inc. will become a wholly-owned
subsidiary of Wisconsin Energy (the "WICOR Transaction") and
although no change of control of Wisconsin Energy will occur in
connection with such acquisition, the inevitable adjustments that
will occur following the acquisition may result in loss or
distraction of employees of Wisconsin Energy and its subsidiaries
to the detriment of Wisconsin Energy and its shareholders.
Accordingly, the Board of Directors of Wisconsin Energy (the
"Board") has determined that appropriate steps should be taken to
assure Wisconsin Energy of the continued employment and attention
and dedication to duty of its employees and to seek to ensure the
availability of their continued service, notwithstanding the
closing of the WICOR Transaction.
Further, on April 25, 2000, the Board has determined that
further steps should be taken to seek to assure the continued
employment, attention and dedication to duty of the Participants
by affording them with reasonable security against changes in
their employment relationship should a change in control of
Wisconsin Energy occur, entirely apart from the WICOR
Transaction.
Therefore, in order to fulfill the above purposes, the
following plan has been developed and is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Time of Merger (as defined in the Merger
Agreement), Wisconsin Energy hereby establishes a separation
compensation plan known as the Wisconsin Energy Special Executive
Severance Policy, as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have
the following respective meanings unless the context clearly
indicates otherwise.
(a) Annual Compensation. The sum of a Participant's
Annual Salary and Annual Incentive Award.
(b) Annual Incentive Award. The highest annual cash
incentive award earned by a Participant during any
of the 3 years prior to a termination of
employment entitling the Participant to a
Separation Benefit.
(c) Annual Salary. The Participant's regular annual
base salary immediately prior to his or her
termination of employment, including compensation
converted to other benefits under a flexible pay
arrangement maintained by the Corporation or
deferred pursuant to a written plan or agreement
with the Corporation, but excluding overtime pay,
allowances, premium pay, compensation paid or
payable under any Corporation long-term or
short-term incentive plan or any similar payment.
(d) Board. The Board of Directors of Wisconsin
Energy.
(e) Code. The Internal Revenue Code of 1986, as
amended from time to time.
(f) Committee. The Compensation Committee of the
Board.
(g) Corporation. Wisconsin Energy and any successor
thereto.
(h) Date of Termination. The date on which a
Participant ceases to be an Employee.
(i) Employee. Any full-time, regular-benefit,
non-bargaining employee of an Employer. The term
shall exclude all individuals employed as
independent contractors, temporary employees,
other benefit employees, non-benefit employees,
leased employees, even if it is subsequently
determined that such classification is incorrect.
(j) Employer. The Corporation, WICOR, Inc. as of the
Effective Time of Merger as defined in the Merger
Agreement, or a Subsidiary which has adopted the
Plan pursuant to Article V hereof.
(k) Participant. An individual who is designated as
such pursuant to Section 3.1.
(l) Plan. The Wisconsin Energy Special Executive
Severance Policy.
(m) Separation Benefits. The benefits described in
Section 4.3 that are provided to qualifying
Participants under the Plan. Such benefits are
also referred to as Tier 1 benefits.
(n) Separation Period. The period beginning on a
Participant's Date of Termination and ending on
the third anniversary thereof.
(o) Subsidiary. Any corporation in which the
Corporation, directly or indirectly, holds a
majority of the voting power of such corporation's
outstanding shares of capital stock.
(p) Target Annual Incentive. The Annual Incentive
Award that the Participant would have earned for
the year in which his or her Date of Termination
occurs, if the target goals had been achieved.
(q) WICOR Closing Date. The Effective Time of Merger
as defined in the Merger Agreement.
(r) Year 2000 Definitions. The words defined in the
Appendix attached hereto were added to the Plan by
an Amendment Agreement adopted by Wisconsin Energy
on April 25, 2000.
ARTICLE III
ELIGIBILITY
III.1 Participation. Each of the individuals named on
Schedule 1 hereto shall be a Participant in the Plan. Schedule 1
may be amended by the Board from time to time to add individuals
as Participants.
III.2 Duration of Participation. A Participant shall
only cease to be a Participant in the Plan as a result of an
amendment or termination of the Plan complying with Article VII
of the Plan, or when he ceases to be an Employee of any Employer,
unless, at the time he ceases to be an Employee, such Participant
is entitled to payment of Separation Benefits as provided in the
Plan or there has been an event or occurrence described in
Section 4.2(a) or (aa) which would enable the Participant to
terminate his employment and receive Separation Benefits. A
Participant entitled to payment of a Separation Benefit or any
other amounts under the Plan shall remain a Participant in the
Plan until the full amount of the Separation Benefit and any
other amounts payable under the Plan have been paid to the
Participant. After the end of a 2-year period following the
WICOR Closing Date, the Board may remove any Participant from
coverage under the Plan. The removal may be accomplished by the
Board's causing the Employer to provide written notice of such
removal to the Participant at least one year in advance of the
effective date of removal. The earliest effective date of any
removal is the first day after the end of a 2-year period
following the WICOR Closing Date, assuming that the required
written notice of removal was given to the Participant at least
one year in advance. If prior to the effective date of such
removal, the Participant has become entitled to payment of a
Separation Benefit or any other amounts under the Plan, such
individual shall remain a Participant in the Plan until the full
amount of the Separation Benefit and any other amounts payable
under the Plan have been paid to the Participant.
ARTICLE IV
SEPARATION BENEFITS
IV.1 Right to Separation Benefit. A Participant shall be
entitled to receive Separation Benefits in accordance with
Section 4.3 if the Participant ceases to be an Employee for any
reason specified in Section 4.2(a) or (aa).
IV.2 Termination of Employment.
(a) Terminations Which Give Rise to Separation
Benefits Under This Plan. Except as set forth in Section
4.2(b), a Participant shall be entitled to Separation
Benefits if at any time on or after the WICOR Closing Date
and before the end of a 2-year period following the WICOR
Closing Date:
(i) the Participant ceases to be an Employee by
action of the Employer or any of its
affiliates (excluding any transfer to another
Employer);
(ii) the Participant's Annual Salary is reduced
below the higher of (A) the amount in effect
immediately before the WICOR Closing Date and
(B) the highest amount in effect at any time
thereafter, and the Participant ceases to be
an Employee by his or her own action within
90 days after the occurrence of such
reduction;
(iii) the Participant's duties and
responsibilities or the program of incentive
compensation or retirement and welfare
benefits offered to the Participant are
diminished in comparison to the duties and
responsibilities or the program of incentive
compensation or retirement and welfare
benefits enjoyed by the Participant
immediately before the WICOR Closing Date,
and the Participant ceases to be an Employee
by his or her own action within 90 days after
the occurrence after such reduction;
(iv) the Participant is required to be based at a
location more than 35 miles from the location
where the Participant was based and performed
services immediately before the WICOR Closing
Date, and the Participant ceases to be an
Employee by his or her own action within 90
days after such relocation;
(v) an Employer or any affiliate of an Employer
sells or otherwise distributes or disposes of
the subsidiary, branch or other business unit
in which the Participant was employed before
such sale, distribution or disposition and
the requirements of Section 4.2(b)(iii) are
not met, and the Participant ceases to be an
Employee by action of the Employer upon or
within 90 days after such sale, distribution
or disposition; or
(vi) the Participant ceases to be an Employee by
his or her own action within 6 months after
completion of one year of service following
the WICOR Closing Date.
(aa) Covered Termination Associated with a Change in
Control. In the event of a Covered Termination Associated
with a Change in Control, a Participant shall be entitled to
receive Separation Benefits in accordance with Section 4.3.
(b) Terminations Which Do Not Give Rise to Separation
Benefits Under This Plan. If a Participant's employment is
terminated for Cause, disability, death, or a qualified sale
of business (as those terms are defined below), or
voluntarily by the Participant (whether on account of
retirement or otherwise) in the absence of an event
described in Section 4.2(a)(ii), 4.2(a)(iii), 4.2(a)(iv) or
4.2(a)(vi) or described in item 3(c) of the Appendix, the
Participant shall not be entitled to Separation Benefits
under the Plan.
(i) A termination for disability shall have
occurred where a Participant is terminated
because illness or injury has prevented him
or her from performing his or her duties (as
they existed immediately prior to the illness
or injury) on a full time basis for 180
consecutive business days.
(ii) A termination for Cause shall have occurred
where a Participant is terminated because of:
A. the willful and continued failure of the
Participant to perform substantially the
Participant's duties with the Corporation or one
of its affiliates (other than any such failure
resulting from incapacity due to physical or
mental illness), after a written demand for
substantial performance is delivered to the
Participant by the Board or an elected officer of
the Corporation which specifically identifies the
manner in which the Board or the elected officer
believes that the Participant has not
substantially performed the Participant's duties,
or
B. the willful engaging by the Participant
in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Corporation.
For purposes of this provision, no act or failure
to act, on the part of the Participant, shall be
considered "willful" unless it is done, or omitted to
be done, by the Participant in bad faith or without
reasonable belief that the Participant's action or
omission was in the best interests of the Corporation.
Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or
upon the advice of counsel for the Corporation, shall
be conclusively presumed to be done, or omitted to be
done, by the Participant in good faith and in the best
interests of the Corporation.
(iii) A termination due to a qualified sale of
business shall have occurred where an
Employer or an affiliate of an Employer has
sold, distributed or otherwise disposed of
the subsidiary, branch or other business unit
in which the Participant was employed before
such sale, distribution or disposition and
the Participant has been offered employment
with the purchaser of such subsidiary, branch
or other business unit or the corporation or
other entity which is the owner thereof on
substantially the same terms and conditions
under which he worked for the Employer
(including, without limitation, base salary,
duties and responsibilities, program of
benefits and location where based). Such
terms and conditions shall also include,
without limitation, a legally binding
agreement or plan covering such Participant,
providing that upon a termination of
employment with the subsidiary, branch or
business unit (or the corporation or other
entity which is the owner thereof) or any
successor thereto of the kind described in
Article VI of this Plan, at any time before
the end of a 2-year period following either
the WICOR Closing Date or the first date on
which a Change in Control of the Corporation
occurs, as the case may be, the Participant's
employer or any successor will pay to each
such former Participant an amount equal to
the Separation Benefit and other benefits
that such former Participant would have
received under the Plan had he been a
Participant at the time of such termination.
For purposes of this subsection, the new
employer plan or agreement must treat service
with any Employer (irrespective of whether
the Employer was an affiliate of the
Corporation or the Employee was a Participant
at the time of such service) and the new
employer as continuous service for purposes
of calculating Separation Benefits.
IV.3 Separation Benefits.
(a) If a Participant's employment is terminated in
circumstances entitling him to a separation benefit as
provided in Section 4.2(a) or (aa), the Participant's
Employer shall pay such Participant, within 20 days of the
Date of Termination, a cash lump sum as set forth in Section
4.3(b) (unless a deferral has been elected under the next
sentence) and the continued benefits set forth as Section
4.3(c). The Participant may file a written irrevocable
deferral election form with the Employer either prior to the
expiration of thirty days from the date he or she has become
a Participant in this Plan and prior to termination of
employment, or in the event of a Covered Termination
Associated with a Change in Control, prior to the first date
on which a Change in Control of the Corporation occurs,
electing to defer all or part of such compensation and
irrevocably specifying a method of payment for such
compensation from among the methods allowable under the
Corporation's Executive Deferred Compensation Plan (the
"EDCP"). Any deferred amounts shall be credited with
earnings in the same manner as the Interest Rate Fund
provided for in the EDCP or any other investment alternative
that may later become allowable under the EDCP and the EDCP
provisions shall apply to deferrals made hereunder except
that (i) the provisions for a mandatory lump sum payment
upon a "Change in Control" as defined in the EDCP shall not
apply to deferrals made hereunder and (ii) the entire amount
deferred under this Plan shall be paid in a lump sum by the
Corporation no later than 20 days from the Date of
Termination to such grantor or "rabbi" trust as the
Corporation shall have established as a vehicle to hold such
amount pending payment, but with such trust designed so that
the Executive's rights to payment of such benefits are no
greater than those of an unsecured creditor. For purposes
of determining the benefits set forth in Sections 4.3(b) and
4.3(c), if the termination of the Participant's employment
is based upon a reduction of the Participant's Annual Salary
or benefits as described in Section 4.2(a)(ii) or
4.2(a)(iii) or as described in those same sections as
modified in Section 3(c) of the Appendix, such reduction
shall be ignored.
(b) The cash lump sum referred to in Section 4.3(a)
shall equal the aggregate of the following amounts:
(i) the sum of (A) the Participant's Annual
Salary through the Date of Termination to the
extent not theretofore paid, (B) the product
of (1) the Target Incentive and (2) a
fraction, the numerator of which is the
number of days in such year through the date
of Termination, and the denominator of which
is 365, and (C) any accrued vacation pay, in
each case to the extent not theretofore paid
and in full satisfaction of the rights of the
Participant thereto;
(ii) an amount equal to the product of (A) three,
and (B) the sum of (1) the Participant's
Annual Salary and (2) the higher of the
Target Annual Incentive Award or the Annual
Incentive Award; and
(iii) an amount equal to the difference
between (A) the actuarial equivalent of the
benefit under the Corporation's qualified
defined benefit retirement plan (the
"Retirement Plan") and any excess or
supplemental retirement plans in which the
Participant participates (together, the
"SERP") which the Participant would receive
if his or her employment continued during the
Separation Period, assuming that the
Participant's compensation during the
Separation Period would have been equal to
his or her compensation as in effect
immediately before the termination or, if
higher, immediately before the WICOR Closing
Date or the first date on which a Change in
Control of the Corporation occurs, as the
case may be, and (B) the actuarial equivalent
of the Participant's actual benefit (paid or
payable), if any, under the Retirement Plan
and the SERP as of the Date of Termination.
The actuarial assumptions used for purposes
of determining actuarial equivalence shall be
no less favorable to the Participant than the
most favorable of those in effect under the
Retirement Plan and the SERP on the Date of
Termination and the WICOR Closing Date or the
first date on which a Change in Control of
the Corporation occurs, as the case may be.
(c) The continued benefits referred to above shall be
the provision to the Participant and his or her family
during the Separation Period of medical, dental and life
insurance benefits as if the Participant's employment had
not been terminated; provided, however, that if the
Participant becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits)
of the Participant for retiree medical, dental and life
insurance benefits under the Corporation's plans, practices,
programs and policies, the Participant shall be considered
to have remained employed during the Separation Period and
to have retired on the last day of such period.
To the extent any benefits described in this Section 4.3(c)
cannot be provided pursuant to the appropriate plan or program
maintained for Employees, the Employer shall provide such
benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Participant.
IV.4 Other Benefits Payable. The cash lump sum and
continuing benefits described in Section 4.3 above shall be
payable in addition to, and not in lieu of, all other accrued or
vested or earned but deferred compensation, rights, options or
other benefits which may be owed to a Participant upon or
following termination, including but not limited to accrued
vacation or sick pay, amounts or benefits payable under any bonus
or other compensation plans, stock option plan, stock ownership
plan, stock purchase plan, restricted stock plan, life insurance
plan, health plan, disability plan or similar or successor plan,
but excluding any severance pay under any severance plan,
practice or program or pay in lieu of notice required to be paid
to such Participant under applicable law.
IV.5 Certain Reduction of Payments by the Corporation.
Notwithstanding any other provision of this Plan, if any
portion of the Separation Benefits or any other payment under any
other agreement with or plan of the Corporation or the Employer
(in the aggregate "Total Payments"), would constitute an "excess
parachute payment," then the Total Payments to be made to the
Participant shall be reduced such that the value of the aggregate
Total Payments that the Participant is entitled to receive shall
be One Dollar ($1) less than the maximum amount which the
Participant may receive without becoming subject to the tax
imposed by Section 4999 of the Internal Revenue Code (the "Code")
(or any successor provision) or which the Corporation may pay
without loss of deduction under Section 280G(a) of the Code (or
any successor provision). For purposes of this Plan, the terms
"excess parachute payment" and "parachute payments" shall have
the meaning assigned to them in Section 280G of the Code (or any
successor provision), and such "parachute payments" shall be
valued as provided therein. Present value for purposes of this
Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code (or any successor provision). Within 60
days following delivery of a notice by the Corporation to the
Participant of its belief that there is a payment or benefit due
the Participant which will result in an excess parachute payment
as defined in Section 280G of the Code (or any successor
provision), the Participant and the Corporation, at the
Corporation's expense, shall obtain the opinion (which need not
be unqualified) of the Corporation's independent auditors which
sets forth (A) the amount of the Base Period Income, (B) the
amount and present value of Total Payments and (C) the amount and
present value of any excess parachute payments without regard to
the limitations of this Section 4.5. As used in this Section
4.5, "Base Period Income" means the Participant's "annualized
includible compensation for the base period" as defined in
Section 280G(d)(1) of the Code (or any successor provision). For
purposes of such opinion, the value of any noncash benefits or
any deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code (or any
successor provisions), which determination shall be evidenced in
a certificate of such auditors addressed to the Corporation and
the Participant. Such opinion shall be dated as of the
Participant's date of termination of employment and addressed to
the Corporation and the Participant and shall be binding, absent
manifest error, upon the Corporation and the Participant. If
such opinion determines that there would be an excess parachute
payment, the Separation Benefits hereunder or any other payment
determined by such auditors to be includible in Total Payments
shall be reduced or eliminated as specified by the Participant in
writing delivered to the Corporation within 30 days of the
Participant's receipt of such opinion or, if the Participant
fails to so notify the Corporation, then as the Corporation shall
reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment.
If such auditors so request in connection with the opinion
required by this Section, the Participant and the Corporation
shall obtain, at the Corporation's expense, and the auditors may
rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by the
Participant. Notwithstanding the foregoing, the calculations
provided for herein shall be based upon the conclusive
presumption that the following are reasonable: the compensation
payments made under Section 4.3(b)(i) as well as any other
compensation, earned prior to the date of the Participant's
termination of employment pursuant to the Corporation's
compensation programs if such payments would have been made in
the future in any event, even though the timing of such payment
is triggered by the Change of Control. If the provisions of
Sections 280G and 4999 of the Code (or any successor provisions)
are repealed without succession, then this Section 4.5 shall be
of no further force or effect.
The Participant shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful,
would subject the Participant to the tax imposed by Section 4999
of the Code. Such notification shall be given as soon as
practicable, but no later than 10 business days after the
Participant is informed in writing of such claim and shall
apprise the Corporation of the nature of the claim and the date
on which such claim is requested to be paid. The Participant
shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives notice to the
Corporation (or such shorter period ending on the date that any
payment of taxes with respect to the claim is due). If the
Corporation notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim,
the Participant agrees to give the Corporation any information
reasonably requested by the Corporation in writing relating to
such claim, to take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Corporation, to cooperate with the
Corporation in good faith in order to effectively contest such
claim, to permit the Corporation to control any proceedings
relating to such claim and to permit the Corporation to pursue or
forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority with respect to such
claim. The Corporation shall bear and pay directly all costs and
expenses, including additional interest and penalties, incurred
in connection with such contest. Further, provided only that
Corporation receives timely written notification from the
Participant with respect to such claim, the Corporation will
indemnify and hold the Participant harmless, on an after-tax
basis, for any excise tax under Section 4999 of the Code
(including interest and penalties thereon), such that the net
amount retained by the Participant after the deduction of any
such excise tax and any interest or penalties thereon (but not
any federal, state or local income tax) would be the same as if
such excise tax had never applied.
IV.6 Payment Obligations Absolute; Offset for WICOR
Agreements and for Wisconsin Energy Senior Executive Severance
Policy. Subject to Section 4.5 and except for the WICOR
Agreements offset and offset for the Wisconsin Energy Senior
Executive Severance Policy described below, the obligations of
the Corporation and the Employers to pay the separation benefits
described in Section 4.3 shall be absolute and unconditional and
shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or
other right which the Corporation or any of its Subsidiaries may
have against any Participant. In no event shall a Participant be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to a Participant under
any of the provisions of this Plan, nor shall the amount of any
payment hereunder be reduced by any compensation earned by a
Participant as a result of employment by another employer, except
as specifically provided in Section 4.3(c). The parties
acknowledge that pursuant to the Merger Agreement the Corporation
(or a Subsidiary) has expressly assumed all of the obligations of
WICOR under certain Key Executive Employment and Severance
Agreements between WICOR and certain Participants dated in 1997
(the "WICOR Agreements"). The WICOR Agreements provide for the
payment of certain cash compensation (the "WICOR Cash Amounts")
and provision of certain benefits (the "WICOR Benefits") to the
Participants covered by a WICOR Agreement under certain
circumstances. Should the Corporation (or a Subsidiary) become
obligated to make any WICOR Cash Amounts or WICOR Benefits, such
items shall be offset against any cash payments or benefits
otherwise due to such Participant under the terms of this Plan in
the manner provided herein. The WICOR Cash Amounts shall be
offset dollar-for-dollar against any cash payments otherwise due
under this Plan. The Corporation's obligation to such
Participant with respect to the SERP referenced in Section
4.3(b)(iii) of this Plan shall be subject to an actuarial
equivalent offset for the value of the additional pension benefit
provided for in Section 8(b)(i) of the WICOR Agreement. Unless
such Participant elects within 10 days after the Date of
Termination to commence pension benefits immediately, the offset
will be calculated for any such Participant who is younger than
age 63 on the Date of Termination as if such additional pension
benefits were earned over the 2-year period following such
Participant's Date of Termination and became payable at the end
of such period and calculated for any such Participant who is age
63 or older on the Date of Termination as if such additional
pension benefits were earned up until such Participant's 65th
birthday and became payable then. Actuarial equivalency for this
purpose shall be determined using the interest rate and mortality
table referenced in Article VIII of the SERP. The Corporation's
obligation to such Participants under Section 4.3(c) hereof with
respect to life insurance and medical and dental benefits shall
be eliminated entirely if the Corporation (or a Subsidiary)
becomes obligated under Section 8(b)(ii) of the WICOR Agreement
to provide welfare benefits of the same type to such Participant
and his or her family, for the period of time that such welfare
benefits are provided under the WICOR Agreement. However, if at
the end of such period of time, the Separation Period for welfare
benefits of the same type under Section 4.3(c) would not have
expired, then the Corporation shall extend the life insurance,
medical and dental benefits under the terms of Section 4.3(c)
hereof for the remaining balance of the Separation Period. If
the Corporation (or a Subsidiary) becomes obligated to and
provides outplacement services to any such Participant under
Section 8(b)(iii) of the WICOR Agreement, the cost to the
Corporation (and any Subsidiary) of such services shall be a
dollar-for-dollar offset against any cash payments otherwise due
to such Participant under this Plan. If any Participant in this
Plan is also a participant under the Wisconsin Energy Senior
Executive Severance Policy adopted by Wisconsin Energy in 1995
(the "SESP") and become entitled to any cash or benefits under
the terms of the SESP, the same shall be offset against any cash
or benefits otherwise due to such Participant under the terms of
this Plan.
ARTICLE V
PARTICIPATING EMPLOYERS
This Plan may be adopted by any Subsidiary of the
Corporation. Upon such adoption, the Subsidiary shall become an
Employer hereunder and the provisions of the Plan shall be fully
applicable to the Employees of that Subsidiary who are
Participants pursuant to Section 3.1.
ARTICLE VI
SUCCESSOR TO CORPORATION
This Plan shall bind any successor of the Corporation, its
assets or its businesses (whether direct or indirect, by
purchase, merger, consolidation or otherwise) in the same manner
and to the same extent that the Corporation would be obligated
under this Plan if no succession had taken place.
In the case of any transaction in which a successor would
not by the foregoing provision or by operation of law be bound by
this Plan, the Corporation shall require such successor expressly
and unconditionally to assume and agree to perform the
Corporation's obligations under this Plan, in the same manner and
to the same extent that the Corporation would be required to
perform if no such succession had taken place. The term
"Corporation," as used in this Plan, shall mean the Corporation
as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by this
Plan.
ARTICLE VII
DURATION, AMENDMENT AND TERMINATION
VII.1 Duration. This Plan shall be deemed established,
without the need for any further act by the Board, on the
Effective Time of Merger and it shall continue for a period of 2
years after the WICOR Closing Date, on which date it will expire,
unless extended for an additional period or periods by resolution
adopted by the Board.
However, once the WICOR Closing Date has occurred, then
notwithstanding any other provision of the Plan, the Plan shall
continue in full force and effect and shall not terminate or
expire until after all Participants who become entitled to any
payments hereunder shall have received such payments in full and
all adjustments required to be made pursuant to Sections 4.5 and
4.6 have been made.
If the Effective Time of Merger has not occurred on or prior
to January 1, 2001, then this Plan will become void and of no
force and effect.
Pursuant to the Amendment Agreement, the Board has extended
this Plan to continue it on a year by year basis after the
expiration of a period of 2 years following the WICOR Closing
Date. The Corporation reserves the right, however, to terminate
this Plan at any time by providing written notice of such
termination to each person who is then a Participant at least one
year in advance of the effective date of the Plan's termination.
However, if prior to the effective date of the Plan termination,
a Participant has become entitled to payment of a Separation
Benefit or any other amounts under the Plan, such individual
shall remain a Participant in the Plan until the full amount of
the Separation Benefit and any other amounts payable under the
Plan have been paid to the Participant.
VII.2 Amendment. Except as provided in Section 7.1, the
Plan shall not be subject to amendment, change, substitution,
deletion, revocation or termination in any respect which
adversely affects the rights of Participants. Notwithstanding
any other provision in the Plan, nothing in the Amendment
Agreement shall in any manner alter or diminish or be construed
to alter or diminish the rights of the individuals who are
Participants in this Plan as of the WICOR Closing Date.
VII.3 Form of Amendment. The form of any amendment of
the Plan shall be a written instrument signed by a duly
authorized officer or officers of the Corporation, certifying
that the amendment has been approved by the Board.
ARTICLE VIII
MISCELLANEOUS
VIII.1 Indemnification. If a Participant institutes any
legal action in seeking to obtain or enforce or is required to
defend in any legal action the validity or enforceability of, any
right or benefit provided by this Plan, the Corporation or the
Employer will pay for all actual reasonable legal fees and
expenses incurred (as incurred) by such Participant, regardless
of the outcome of such action.
VIII.2 Employment Status. This Plan does not constitute
a contract of employment or impose on the Participant or the
Participant's Employer any obligation to retain the Participant
as an Employee, to change the status of the Participant's
employment, or to change the Corporation's policies or those of
its Subsidiaries regarding termination of employment.
VIII.3 Claim Procedure. If an Employee or former
Employee makes a written request alleging a right to receive
benefits under this Plan or alleging a right to receive an
adjustment in benefits being paid under the Plan, the Corporation
shall treat it as a claim for benefit. All claims for benefit
under the Plan shall be sent to the Human Resources Department of
the Corporation and must be received within 90 days after
termination of employment. If the Corporation determines that
any individual who has claimed a right to receive benefits, or
different benefits, under the Plan is not entitled to receive all
or any part of the benefits claimed, it will inform the claimant
in writing of its determination and the reasons therefor in terms
calculated to be understood by the claimant. The notice will be
sent within 90 days of the claim unless the Corporation
determines additional time, not exceeding 90 days, is needed.
The notice shall make specific reference to the pertinent Plan
provisions on which the denial is based, and describe any
additional material or information that is necessary. Such
notice shall, in addition, inform the claimant what procedure the
claimant should follow to take advantage of the review procedures
set forth below in the event the claimant desires to contest the
denial of the claim. The claimant may within 90 days thereafter
submit in writing to the Corporation a notice that the claimant
contests the denial of his or her claim by the Corporation and
desires a further review. The Corporation shall within 60 days
thereafter review the claim and authorize the claimant to appear
personally and review pertinent documents and submit issues and
comments relating to the claim to the persons responsible for
making the determination on behalf of the Corporation. The
Corporation will render its final decision with specific reasons
therefor in writing and will transmit it to the claimant within
60 days of the written request for review, unless the Corporation
determines additional time, not exceeding 60 days, is needed, and
so notifies the Participant. If the Corporation fails to respond
to a claim filed in accordance with the foregoing within 60 days
or any such extended period, the Corporation shall be deemed to
have denied the claim.
VIII.4 Validity and Severability. The invalidity or
unenforceability of any provision of the Plan shall not affect
the validity or enforceability of any other provision of the
Plan, which shall remain in full force and effect, and any
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
VIII.5 Governing Law. The validity, interpretation,
construction and performance of the Plan shall in all respects be
governed by the laws of Wisconsin, without reference to
principles of conflict of law, except to the extent preempted by
federal law.
VIII.6 Notices. All communications provided for herein
shall be in writing and shall be deemed to have been duly given
when delivered or five business days after having been mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the Employer (to the
attention of the Secretary of the Employer) at its principal
executive office and to the Participant at his/her principal
residence, or to such other address as any party may have
furnished to the other in writing in accordance herewith, except
that notices of a change of address shall be effective only upon
receipt.
SCHEDULE 1
Participants Eligible for Tier 1 Separation
Benefits if the Conditions Specified in
Section 4.2(a) are Satisfied:
Thomas Schrader
Joseph Wenzler
Bronson Haase
James Donnelly
Exhibit (10)-4
WISCONSIN ENERGY CORPORATION
AMENDED AND RESTATED
EXECUTIVE SEVERANCE POLICY
Introduction
Wisconsin Energy Corporation, a Wisconsin corporation
("Wisconsin Energy") has entered into an Agreement and Plan of
Merger dated as of June 27, 1999, as amended, (the "Merger
Agreement") among Wisconsin Energy, WICOR, Inc. and CEW
Acquisition, Inc. whereby WICOR, Inc. ("WICOR") will become a
wholly-owned subsidiary of Wisconsin Energy (the "WICOR
Transaction") and although no change of control of Wisconsin
Energy will occur in connection with such acquisition, the
inevitable adjustments that will occur following the acquisition
may result in loss or distraction of employees of Wisconsin
Energy and its subsidiaries to the detriment of Wisconsin Energy
and its shareholders.
Accordingly, the Board of Directors of Wisconsin Energy (the
"Board") has determined that appropriate steps should be taken to
assure Wisconsin Energy of the continued employment and attention
and dedication to duty of its employees and to seek to ensure the
availability of their continued service, notwithstanding the
closing of the WICOR Transaction.
Further, on April 25, 2000, the Board has determined that
further steps should be taken to seek to assure the continued
employment, attention and dedication to duty of the Participants
by affording them with reasonable security against changes in
their employment relationship should a change in control of
Wisconsin Energy occur, entirely apart from the WICOR
Transaction.
Therefore, in order to fulfill the above purposes, the
following plan has been developed and is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Time of Merger (as defined in the Merger
Agreement), Wisconsin Energy hereby establishes a separation
compensation plan known as the Wisconsin Energy Executive
Severance Policy, as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have
the following respective meanings unless the context clearly
indicates otherwise.
(a) Annual Compensation. The sum of a Participant's
Annual Salary and Annual Incentive Award.
(b) Annual Incentive Award. The highest annual cash
incentive award earned by a Participant during any of the 3
years prior to a termination of employment entitling the
Participant to a Separation Benefit.
(c) Annual Salary. The Participant's regular annual
base salary immediately prior to his or her termination of
employment, including compensation converted to other
benefits under a flexible pay arrangement maintained by the
Corporation or deferred pursuant to a written plan or
agreement with the Corporation, but excluding overtime pay,
allowances, premium pay, compensation paid or payable under
any Corporation long-term or short-term incentive plan or
any similar payment.
(d) Board. The Board of Directors of Wisconsin
Energy.
(e) Code. The Internal Revenue Code of 1986, as
amended from time to time.
(f) Committee. The Compensation Committee of the
Board.
(g) Corporation. Wisconsin Energy and any successor
thereto.
(h) Date of Termination. The date on which a
Participant ceases to be an Employee.
(i) Employee. Any full-time, regular-benefit,
non-bargaining employee of an Employer. The term shall
exclude all individuals employed as independent contractors,
temporary employees, other benefit employees, non-benefit
employees, leased employees, even if it is subsequently
determined that such classification is incorrect.
(j) Employer. The Corporation, WICOR, Inc. as of the
Effective Time of Merger as defined in the Merger Agreement,
or a Subsidiary which has adopted the Plan pursuant to
Article V hereof.
(k) Participant. An individual who is designated as
such pursuant to Section 3.1.
(l) Plan. The Wisconsin Energy Executive Severance
Policy.
(m) Separation Benefits. The benefits described in
Section 4.3 that are provided to qualifying Participants
under the Plan.
(n) Separation Period. The period beginning on a
Participant's Date of Termination and ending on the third
anniversary thereof for a Participant designated on Schedule
1 as eligible for a Tier 2 Separation Benefit, ending on the
second anniversary thereof for a Participant designated as
eligible for a Tier 3 Separation Benefit, and ending on the
first anniversary thereof for a Participant designated as
eligible for a Tier 4 Separation Benefit.
(o) Subsidiary. Any corporation in which the
Corporation, directly or indirectly, holds a majority of the
voting power of such corporation's outstanding shares of
capital stock.
(p) Target Annual Incentive. The Annual Incentive
Award that the Participant would have earned for the year in
which his or her Date of Termination occurs, if the target
goals had been achieved.
(q) WICOR Closing Date. The Effective Time of Merger
as defined in the Merger Agreement.
(r) Year 2000 Definitions. The words defined in the
Appendix attached hereto were added to the Plan by an
Amendment Agreement adopted by Wisconsin Energy on April 25,
2000.
ARTICLE III
ELIGIBILITY
III.1 Participation. Each of the individuals named on
Schedule 1 hereto shall be a Participant in the Plan. Schedule 1
may be amended by the Board from time to time to add individuals
as Participants. All Participants will also be designated on
Schedule 1 as eligible for either a Tier 2, Tier 3 or Tier 4
Separation Benefit under the provisions of section 4.3(b)(ii)
hereof.
III.2 Duration of Participation. A Participant shall
only cease to be a Participant in the Plan as a result of an
amendment or termination of the Plan complying with Article VII
of the Plan, or when he ceases to be an Employee of any Employer,
unless, at the time he ceases to be an Employee, such Participant
is entitled to payment of Separation Benefits as provided in the
Plan or there has been an event or occurrence described in
Section 4.2(a) or (aa) which would enable the Participant to
terminate his employment and receive Separation Benefits. A
Participant entitled to payment of a Separation Benefit or any
other amounts under the Plan shall remain a Participant in the
Plan until the full amount of the Separation Benefit and any
other amounts payable under the Plan have been paid to the
Participant. After the end of a 2-year period following the
WICOR Closing Date, the Board may remove any Participant from
coverage under the Plan. The removal may be accomplished by the
Board's causing the Employer to provide written notice of such
removal to the Participant at least one year in advance of the
effective date of removal. The earliest effective date of any
removal is the first day after the end of a 2-year period
following the WICOR Closing Date, assuming that the required
written notice of removal was given to the Participant at least
one year in advance. If prior to the effective date of such
removal, the Participant has become entitled to payment of a
Separation Benefit or any other amounts under the Plan, such
individual shall remain a Participant in the Plan until the full
amount of the Separation Benefit and any other amounts payable
under the Plan have been paid to the Participant.
ARTICLE IV
SEPARATION BENEFITS
IV.1 Right to Separation Benefit. A Participant shall be
entitled to receive Separation Benefits in accordance with
Section 4.3 if the Participant ceases to be an Employee for any
reason specified in Section 4.2(a) or (aa).
IV.2 Termination of Employment.
(a) Terminations Which Give Rise to Separation
Benefits Under This Plan. Except as set forth in Section
4.2(b), a Participant shall be entitled to Separation
Benefits if at any time on or after the WICOR Closing Date
and before the end of a 2-year period following the WICOR
Closing Date:
(i) the Participant ceases to be an Employee by
action of the Employer or any of its
affiliates (excluding any transfer to another
Employer);
(ii) the Participant's Annual Salary is reduced
below the higher of (A) the amount in effect
immediately before the WICOR Closing Date and
(B) the highest amount in effect at any time
thereafter, and the Participant ceases to be
an Employee by his or her own action within
90 days after the occurrence of such
reduction;
(iii) the Participant's duties and
responsibilities or the program of incentive
compensation or retirement and welfare
benefits offered to the Participant are
diminished in comparison to the duties and
responsibilities or the program of incentive
compensation or retirement and welfare
benefits enjoyed by the Participant
immediately before the WICOR Closing Date,
and the Participant ceases to be an Employee
by his or her own action within 90 days after
the occurrence after such reduction;
(iv) the Participant is required to be based at a
location more than 35 miles from the location
where the Participant was based and performed
services immediately before the WICOR Closing
Date, and the Participant ceases to be an
Employee by his or her own action within 90
days after such relocation; or
(v) an Employer or any affiliate of an Employer
sells or otherwise distributes or disposes of
the subsidiary, branch or other business unit
in which the Participant was employed before
such sale, distribution or disposition and
the requirements of Section 4.2(b)(iii) are
not met, and the Participant ceases to be an
Employee by action of the Employer upon or
within 90 days after such sale, distribution
or disposition.
(aa) Covered Termination Associated with a Change in
Control. In the event of a Covered Termination Associated
with a Change in Control, a Participant shall be entitled to
receive Separation Benefits in accordance with Section 4.3.
(b) Terminations Which Do Not Give Rise to Separation
Benefits Under This Plan. If a Participant's employment is
terminated for Cause, disability, death, or a qualified sale
of business (as those terms are defined below), or
voluntarily by the Participant (whether on account of
retirement or otherwise) in the absence of an event
described in Section 4.2(a)(ii), 4.2(a)(iii) or 4.2(a)(iv)
or described in item 3(c) of the Appendix, the Participant
shall not be entitled to Separation Benefits under the Plan.
(i) A termination for disability shall have
occurred where a Participant is terminated
because illness or injury has prevented him
or her from performing his or her duties (as
they existed immediately prior to the illness
or injury) on a full time basis for 180
consecutive business days.
(ii) A termination for Cause shall have occurred
where a Participant is terminated because of:
A. the willful and continued failure of the
Participant to perform substantially the
Participant's duties with the Corporation or one
of its affiliates (other than any such failure
resulting from incapacity due to physical or
mental illness), after a written demand for
substantial performance is delivered to the
Participant by the Board or an elected officer of
the Corporation which specifically identifies the
manner in which the Board or the elected officer
believes that the Participant has not
substantially performed the Participant's duties,
or
B. the willful engaging by the Participant
in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Corporation.
For purposes of this provision, no act or failure
to act, on the part of the Participant, shall be
considered "willful" unless it is done, or omitted to
be done, by the Participant in bad faith or without
reasonable belief that the Participant's action or
omission was in the best interests of the Corporation.
Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or
upon the advice of counsel for the Corporation, shall
be conclusively presumed to be done, or omitted to be
done, by the Participant in good faith and in the best
interests of the Corporation.
(iii) A termination due to a qualified sale of
business shall have occurred where an
Employer or an affiliate of an Employer has
sold, distributed or otherwise disposed of
the subsidiary, branch or other business unit
in which the Participant was employed before
such sale, distribution or disposition and
the Participant has been offered employment
with the purchaser of such subsidiary, branch
or other business unit or the corporation or
other entity which is the owner thereof on
substantially the same terms and conditions
under which he worked for the Employer
(including, without limitation, base salary,
duties and responsibilities, program of
benefits and location where based). Such
terms and conditions shall also include,
without limitation, a legally binding
agreement or plan covering such Participant,
providing that upon a termination of
employment with the subsidiary, branch or
business unit (or the corporation or other
entity which is the owner thereof) or any
successor thereto of the kind described in
Article VI of this Plan, at any time before
the end of a 2-year period following either
the WICOR Closing Date or the first date on
which a Change in Control of the Corporation
occurs, as the case may be, the Participant's
employer or any successor will pay to each
such former Participant an amount equal to
the Separation Benefit and other benefits
that such former Participant would have
received under the Plan had he been a
Participant at the time of such termination.
For purposes of this subsection, the new
employer plan or agreement must treat service
with any Employer (irrespective of whether
the Employer was an affiliate of the
Corporation or the Employee was a Participant
at the time of such service) and the new
employer as continuous service for purposes
of calculating Separation Benefits.
IV.3 Separation Benefits.
(a) If a Participant's employment is terminated in
circumstances entitling him to a separation benefit as
provided in Section 4.2(a) or (aa), the Participant's
Employer shall pay such Participant, within 20 days of the
Date of Termination, a cash lump sum as set forth in Section
4.3(b) (unless a deferral has been elected under the next
sentence) and the continued benefits set forth as Section
4.3(c). The Participant may file a written irrevocable
deferral election form with the Employer either prior to the
expiration of thirty days from the date he or she has become
a Participant in this Plan and prior to termination of
employment, or in the event of a Covered Termination
Associated with a Change in Control, prior to the first date
on which a Change in Control of the Corporation occurs,
electing to defer all or part of such compensation and
irrevocably specifying a method of payment for such
compensation from among the methods allowable under the
Corporation's Executive Deferred Compensation Plan (the
"EDCP"). Any deferred amounts shall be credited with
earnings in the same manner as the Interest Rate Fund
provided for in the EDCP or any other investment alternative
that may later become allowable under the EDCP and the EDCP
provisions shall apply to deferrals made hereunder except
that (i) the provisions for a mandatory lump sum payment
upon a "Change in Control" as defined in the EDCP shall not
apply to deferrals made hereunder and (ii) the entire amount
deferred under this Plan shall be paid in a lump sum by the
Corporation no later than 20 days from the Date of
Termination to such grantor or "rabbi" trust as the
Corporation shall have established as a vehicle to hold such
amount pending payment, but with such trust designed so that
the Executive's rights to payment of such benefits are no
greater than those of an unsecured creditor. For purposes
of determining the benefits set forth in Sections 4.3(b) and
4.3(c), if the termination of the Participant's employment
is based upon a reduction of the Participant's Annual Salary
or benefits as described in Section 4.2(a)(ii) or
4.2(a)(iii) or as described in those same sections as
modified in Section 3(c) of the Appendix, such reduction
shall be ignored.
(b) The cash lump sum referred to in Section 4.3(a)
shall equal the aggregate of the following amounts:
(i) the sum of (A) the Participant's Annual
Salary through the Date of Termination to the
extent not theretofore paid, (B) the product
of (1) the Target Incentive and (2) a
fraction, the numerator of which is the
number of days in such year through the date
of Termination, and the denominator of which
is 365, and (C) any accrued vacation pay, in
each case to the extent not theretofore paid
and in full satisfaction of the rights of the
Participant thereto;
(ii) an amount equal to the product of (A) the
number specified below for the Tier level
applicable to the Participant as set forth on
Schedule 1, and (B) the sum of (1) the
Participant's Annual Salary and (2) the
higher of the Target Annual Incentive Award
or the Annual Incentive Award:
Tier Level Multiplier for (A) Above
Tier 2 3
Tier 3 2
Tier 4 1
(iii) an amount equal to the difference
between (A) the actuarial equivalent of the
benefit under the Corporation's qualified
defined benefit retirement plan (the
"Retirement Plan") and any excess or
supplemental retirement plans in which the
Participant participates (together, the
"SERP") which the Participant would receive
if his or her employment continued during the
Separation Period, assuming that the
Participant's compensation during the
Separation Period would have been equal to
his or her compensation as in effect
immediately before the termination or, if
higher, immediately before the WICOR Closing
Date or the first date on which a Change in
Control of the Corporation occurs, as the
case may be, and (B) the actuarial equivalent
of the Participant's actual benefit (paid or
payable), if any, under the Retirement Plan
and the SERP as of the Date of Termination.
The actuarial assumptions used for purposes
of determining actuarial equivalence shall be
no less favorable to the Participant than the
most favorable of those in effect under the
Retirement Plan and the SERP on the Date of
Termination and the WICOR Closing Date or the
first date on which a Change in Control of
the Corporation occurs, as the case may be.
(c) The continued benefits referred to above shall be
the provision to the Participant and his or her family
during the Separation Period of medical, dental and life
insurance benefits as if the Participant's employment had
not been terminated; provided, however, that if the
Participant becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits)
of the Participant for retiree medical, dental and life
insurance benefits under the Corporation's plans, practices,
programs and policies, the Participant shall be considered
to have remained employed during the Separation Period and
to have retired on the last day of such period.
To the extent any benefits described in this Section 4.3(c)
cannot be provided pursuant to the appropriate plan or program
maintained for Employees, the Employer shall provide such
benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Participant.
IV.4 Other Benefits Payable. The cash lump sum and
continuing benefits described in Section 4.3 above shall be
payable in addition to, and not in lieu of, all other accrued or
vested or earned but deferred compensation, rights, options or
other benefits which may be owed to a Participant upon or
following termination, including but not limited to accrued
vacation or sick pay, amounts or benefits payable under any bonus
or other compensation plans, stock option plan, stock ownership
plan, stock purchase plan, restricted stock plan, life insurance
plan, health plan, disability plan or similar or successor plan,
but excluding any severance pay under any severance plan,
practice or program or pay in lieu of notice required to be paid
to such Participant under applicable law.
IV.5 Certain Reduction of Payments by the Corporation.
Notwithstanding any other provision of this Plan, if any
portion of the Separation Benefits or any other payment under any
other agreement with or plan of the Corporation or the Employer
(in the aggregate "Total Payments"), would constitute an "excess
parachute payment," then the Total Payments to be made to the
Participant shall be reduced such that the value of the aggregate
Total Payments that the Participant is entitled to receive shall
be One Dollar ($1) less than the maximum amount which the
Participant may receive without becoming subject to the tax
imposed by Section 4999 of the Internal Revenue Code (the "Code")
(or any successor provision) or which the Corporation may pay
without loss of deduction under Section 280G(a) of the Code (or
any successor provision). For purposes of this Plan, the terms
"excess parachute payment" and "parachute payments" shall have
the meaning assigned to them in Section 280G of the Code (or any
successor provision), and such "parachute payments" shall be
valued as provided therein. Present value for purposes of this
Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code (or any successor provision). Within 60
days following delivery of a notice by the Corporation to the
Participant of its belief that there is a payment or benefit due
the Participant which will result in an excess parachute payment
as defined in Section 280G of the Code (or any successor
provision), the Participant and the Corporation, at the
Corporation's expense, shall obtain the opinion (which need not
be unqualified) of the Corporation's independent auditors which
sets forth (A) the amount of the Base Period Income, (B) the
amount and present value of Total Payments and (C) the amount and
present value of any excess parachute payments without regard to
the limitations of this Section 4.5. As used in this Section
4.5, "Base Period Income" means the Participant's "annualized
includible compensation for the base period" as defined in
Section 280G(d)(1) of the Code (or any successor provision). For
purposes of such opinion, the value of any noncash benefits or
any deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code (or any
successor provisions), which determination shall be evidenced in
a certificate of such auditors addressed to the Corporation and
the Participant. Such opinion shall be dated as of the
Participant's date of termination of employment and addressed to
the Corporation and the Participant and shall be binding, absent
manifest error, upon the Corporation and the Participant. If
such opinion determines that there would be an excess parachute
payment, the Separation Benefits hereunder or any other payment
determined by such auditors to be includible in Total Payments
shall be reduced or eliminated as specified by the Participant in
writing delivered to the Corporation within 30 days of the
Participant's receipt of such opinion or, if the Participant
fails to so notify the Corporation, then as the Corporation shall
reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment.
If such auditors so request in connection with the opinion
required by this Section, the Participant and the Corporation
shall obtain, at the Corporation's expense, and the auditors may
rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by the
Participant. Notwithstanding the foregoing, the calculations
provided for herein shall be based upon the conclusive
presumption that the following are reasonable: the compensation
payments made under Section 4.3(b)(i) as well as any other
compensation, earned prior to the date of the Participant's
termination of employment pursuant to the Corporation's
compensation programs if such payments would have been made in
the future in any event, even though the timing of such payment
is triggered by the Change of Control. If the provisions of
Sections 280G and 4999 of the Code (or any successor provisions)
are repealed without succession, then this Section 4.5 shall be
of no further force or effect.
The Participant shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful,
would subject the Participant to the tax imposed by Section 4999
of the Code. Such notification shall be given as soon as
practicable, but no later than 10 business days after the
Participant is informed in writing of such claim and shall
apprise the Corporation of the nature of the claim and the date
on which such claim is requested to be paid. The Participant
shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives notice to the
Corporation (or such shorter period ending on the date that any
payment of taxes with respect to the claim is due). If the
Corporation notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim,
the Participant agrees to give the Corporation any information
reasonably requested by the Corporation in writing relating to
such claim, to take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Corporation, to cooperate with the
Corporation in good faith in order to effectively contest such
claim, to permit the Corporation to control any proceedings
relating to such claim and to permit the Corporation to pursue or
forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority with respect to such
claim. The Corporation shall bear and pay directly all costs and
expenses, including additional interest and penalties) incurred
in connection with such contest. Further, provided only that
Corporation receives timely written notification from the
Participant with respect to such claim, the Corporation will
indemnify and hold the Participant harmless, on an after-tax
basis, for any excise tax under Section 4999 of the Code
(including interest and penalties thereon), such that the net
amount retained by the Participant after the deduction of any
such excise tax and any interest or penalties thereon (but not
any federal, state or local income tax) would be the same as if
such excise tax had never applied.
IV.6 Payment Obligations Absolute; Offset for Wisconsin
Energy Senior Executive Severance Policy. Subject to Section 4.5
and except for the Wisconsin Energy Senior Executive Severance
Policy offset described below, the obligations of the Corporation
and the Employers to pay the separation benefits described in
Section 4.3 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which
the Corporation or any of its Subsidiaries may have against any
Participant. In no event shall a Participant be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to a Participant under any of
the provisions of this Plan, nor shall the amount of any payment
hereunder be reduced by any compensation earned by a Participant
as a result of employment by another employer, except as
specifically provided in Section 4.3(c). If any of the
Participants in this Plan are also participants under the
Wisconsin Energy Senior Executive Severance Policy adopted by
Wisconsin Energy in 1995 (the "SESP") and become entitled to any
cash or benefits under the terms of the SESP, the same shall be
offset against any cash or benefits otherwise due to such
Participants under the terms of this Agreement.
ARTICLE V
PARTICIPATING EMPLOYERS
This Plan may be adopted by any Subsidiary of the
Corporation. Upon such adoption, the Subsidiary shall become an
Employer hereunder and the provisions of the Plan shall be fully
applicable to the Employees of that Subsidiary who are
Participants pursuant to Section 3.1.
ARTICLE VI
SUCCESSOR TO CORPORATION
This Plan shall bind any successor of the Corporation, its
assets or its businesses (whether direct or indirect, by
purchase, merger, consolidation or otherwise) in the same manner
and to the same extent that the Corporation would be obligated
under this Plan if no succession had taken place.
In the case of any transaction in which a successor would
not by the foregoing provision or by operation of law be bound by
this Plan, the Corporation shall require such successor expressly
and unconditionally to assume and agree to perform the
Corporation's obligations under this Plan, in the same manner and
to the same extent that the Corporation would be required to
perform if no such succession had taken place. The term
"Corporation," as used in this Plan, shall mean the Corporation
as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by this
Plan.
ARTICLE VII
DURATION, AMENDMENT AND TERMINATION
VII.1 Duration. This Plan shall be deemed established,
without the need for any further act by the Board, on the
Effective Time of Merger and it shall continue for a period of 2
years after the WICOR Closing Date, on which date it will expire,
unless extended for an additional period or periods by resolution
adopted by the Board.
However, once the WICOR Closing Date has occurred, then
notwithstanding any other provision of the Plan, the Plan shall
continue in full force and effect and shall not terminate or
expire until after all Participants who become entitled to any
payments hereunder shall have received such payments in full and
all adjustments required to be made pursuant to Sections 4.5 and
4.6 have been made.
If the Effective Time of Merger has not occurred on or prior
to January 1, 2001, then this Plan will become void and of no
force and effect.
Pursuant to the Amendment Agreement, the Board has extended
this Plan to continue it on a year by year basis after the
expiration of a period of 2 years following the WICOR Closing
Date. The Corporation reserves the right, however, to terminate
this Plan at any time by providing written notice of such
termination to each person who is then a Participant at least one
year in advance of the effective date of the Plan's termination.
However, if prior to the effective date of the Plan termination,
a Participant has become entitled to payment of a Separation
Benefit or any other amounts under the Plan, such individual
shall remain a Participant in the Plan until the full amount of
the Separation Benefit and any other amounts payable under the
Plan have been paid to the Participant.
VII.2 Amendment. Except as provided in Section 7.1, the
Plan shall not be subject to amendment, change, substitution,
deletion, revocation or termination in any respect which
adversely affects the rights of Participants. Notwithstanding
any other provision in the Plan, nothing in the Amendment
Agreement shall in any manner alter or diminish or be construed
to alter or diminish the rights of the individuals who are
Participants in this Plan as of the WICOR Closing Date.
VII.3 Form of Amendment. The form of any amendment of
the Plan shall be a written instrument signed by a duly
authorized officer or officers of the Corporation, certifying
that the amendment has been approved by the Board.
ARTICLE VIII
MISCELLANEOUS
VIII.1 Indemnification. If a Participant institutes any
legal action in seeking to obtain or enforce or is required to
defend in any legal action the validity or enforceability of, any
right or benefit provided by this Plan, the Corporation or the
Employer will pay for all actual reasonable legal fees and
expenses incurred (as incurred) by such Participant, regardless
of the outcome of such action.
VIII.2 Employment Status. This Plan does not constitute
a contract of employment or impose on the Participant or the
Participant's Employer any obligation to retain the Participant
as an Employee, to change the status of the Participant's
employment, or to change the Corporation's policies or those of
its Subsidiaries regarding termination of employment.
VIII.3 Claim Procedure. If an Employee or former
Employee makes a written request alleging a right to receive
benefits under this Plan or alleging a right to receive an
adjustment in benefits being paid under the Plan, the Corporation
shall treat it as a claim for benefit. All claims for benefit
under the Plan shall be sent to the Human Resources Department of
the Corporation and must be received within 90 days after
termination of employment. If the Corporation determines that
any individual who has claimed a right to receive benefits, or
different benefits, under the Plan is not entitled to receive all
or any part of the benefits claimed, it will inform the claimant
in writing of its determination and the reasons therefor in terms
calculated to be understood by the claimant. The notice will be
sent within 90 days of the claim unless the Corporation
determines additional time, not exceeding 90 days, is needed.
The notice shall make specific reference to the pertinent Plan
provisions on which the denial is based, and describe any
additional material or information that is necessary. Such
notice shall, in addition, inform the claimant what procedure the
claimant should follow to take advantage of the review procedures
set forth below in the event the claimant desires to contest the
denial of the claim. The claimant may within 90 days thereafter
submit in writing to the Corporation a notice that the claimant
contests the denial of his or her claim by the Corporation and
desires a further review. The Corporation shall within 60 days
thereafter review the claim and authorize the claimant to appear
personally and review pertinent documents and submit issues and
comments relating to the claim to the persons responsible for
making the determination on behalf of the Corporation. The
Corporation will render its final decision with specific reasons
therefor in writing and will transmit it to the claimant within
60 days of the written request for review, unless the Corporation
determines additional time, not exceeding 60 days, is needed, and
so notifies the Participant. If the Corporation fails to respond
to a claim filed in accordance with the foregoing within 60 days
or any such extended period, the Corporation shall be deemed to
have denied the claim.
VIII.4 Validity and Severability. The invalidity or
unenforceability of any provision of the Plan shall not affect
the validity or enforceability of any other provision of the
Plan, which shall remain in full force and effect, and any
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
VIII.5 Governing Law. The validity, interpretation,
construction and performance of the Plan shall in all respects be
governed by the laws of Wisconsin, without reference to
principles of conflict of law, except to the extent preempted by
federal law.
VIII.6 Notices. All communications provided for herein
shall be in writing and shall be deemed to have been duly given
when delivered or five business days after having been mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the Employer (to the
attention of the Secretary of the Employer) at its principal
executive office and to the Participant at his/her principal
residence, or to such other address as any party may have
furnished to the other in writing in accordance herewith, except
that notices of a change of address shall be effective only upon
receipt.
SCHEDULE 1
Participants Eligible for Separation
Benefits if the Conditions Specified in
Section 4.2(a) are Satisfied and Tier Level
Applicable for Each Such Participant:
A. Employees of the WICOR Companies selected for participation
by WICOR pursuant to Section 3.15(f) of the Merger Agreement
i) For Tier 2: Robert Puissant
James Schott
Donald Jorgensen
J. Russell Phillips
ii) For Tier 3: Greg Kirste
James Monnat
Stephen Dickson
Joan Givler
John Hoy
Michael Jordan
Scott Lord
Robert Nuernberg
Richard Osborne
Wallace Zeddun
iii) For Tier 4: Louise Horton
Kathleen Sieja
Charles Cummings
David Fantle
Harry Fields
John Fuhrmann
Richard Godfrey
Mark Haas
Diane Kippert
Joseph Konrad
Nora Lewis
Kevin Meagher
Dennis Neugent
Peter Newman
Michael Nushart
Luc Piessens
Michael Rau
Thelma Sias
William Starr
Donald Stefanich
Wendy Sukowatey
Barbara Suvaka
Thomas Winter
Ronald Zemlicka
Debra Zorn
Robert Asmondy
Gregory Gozdowiak
Jeffrey VanEss
Mary Wolter
Carey Worbington
B. Employees named by the Board:
i) For Tier 2: Calvin Baker
Barbara Bras
Francis Brzezinski
Charles Cole
Elaine Davis
Thomas Fehring
Anne Klisurich
Walter Kunicki
Kristine Krause
Scott Patulski
David Porter
Kristine Rappe
Jeffrey West
Larry Salustro
Richard White
ii) For Tier 3: Gerald Abood
James Baillon
Sally Bentley
Larry Bruneel
Steven Cartwright
Kenneth Copp
Dale Landgren
Joyce Feaster
Richard Johnson
James Keller
Allan Mihm
James Newton
Donald Sawruk
Robert Whitefoot
iii) For Tier 4: William Beres
Donna Conant
Thomas Conlin
Jewel Currie
Richard Dowdell
Steven Downs
Roma Draba
Phyllis Dube
N. David Durment
Charles Facktor
Thomas Golding
John Greidanus
Robert Hall
Anthony Jankowski
Leslie Kowalski
Joanne Ladenson
Gregory Locke
Ernest Maas
Charles McCaskey
Kris McKinney
David Molinare
Timothy Nechvatal
Richard O'Conor
Steven Quade
Thomas Route
Bruce Sasman
Joan Shafer
Paul Shorter
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF
WISCONSIN ENERGY CORPORATION FOR THE THREE MONTHS ENDED
MARCH 31, AND 2000 IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> <F1> 3,263,794
<OTHER-PROPERTY-AND-INVEST> <F2> 1,595,839
<TOTAL-CURRENT-ASSETS> 686,449
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 651,934
<TOTAL-ASSETS> 6,198,016
<COMMON> 1,202
<CAPITAL-SURPLUS-PAID-IN> 861,425
<RETAINED-EARNINGS> <F3> 1,172,358
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,034,985
0
30,450
<LONG-TERM-DEBT-NET> 1,324,006
<SHORT-TERM-NOTES> 251,522
<LONG-TERM-NOTES-PAYABLE> 628,959
<COMMERCIAL-PAPER-OBLIGATIONS> 118,763
<LONG-TERM-DEBT-CURRENT-PORT> 40,947
0
<CAPITAL-LEASE-OBLIGATIONS> 182,540
<LEASES-CURRENT> 28,392
<OTHER-ITEMS-CAPITAL-AND-LIAB> <F4> 1,557,452
<TOT-CAPITALIZATION-AND-LIAB> 6,198,016
<GROSS-OPERATING-REVENUE> 627,750
<INCOME-TAX-EXPENSE> 32,227
<OTHER-OPERATING-EXPENSES> 539,151
<TOTAL-OPERATING-EXPENSES> <F5> 539,151
<OPERATING-INCOME-LOSS> <F5> 88,599
<OTHER-INCOME-NET> 37,392
<INCOME-BEFORE-INTEREST-EXPEN> <F6> 125,991
<TOTAL-INTEREST-EXPENSE> <F7> 43,170
<NET-INCOME> <F8> 50,594
<F9> 0
<EARNINGS-AVAILABLE-FOR-COMM> 50,594
<COMMON-STOCK-DIVIDENDS> 46,529
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 293,014
<EPS-BASIC> 0.42
<EPS-DILUTED> 0.42
<FN>
<F1> TOTAL NET UTILITY PLANT IS $3,889,712 OF NET PROPERTY,
PLANT AND EQUIPMENT LESS $625,918 OF NET NON-UTILITY
PROPERTY.
<F2> OTHER PROPERTY AND INVESTMENTS IS $969,921 OF INVESTMENTS
PLUS $625,918 OF NET NON-UTILITY PROPERTY.
<F3> RETAINED EARNINGS IS NET OF $2,472 OF UNEARNED COMPENSATION
FOR RESTRICTED STOCK AWARDS.
<F4> OTHER ITEMS - CAPITAL AND LIABILITIES INCLUDES $200,000
OF COMPANY-OBLIGATED, MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY DEBENTURES
OF THE COMPANY.
<F5> TOTAL OPERATING EXPENSES AND OPERATING INCOME OR LOSS
EXCLUDE INCOME TAXES OF $32,227.
<F6> INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES.
<F7> TOTAL INTEREST EXPENSE INCLUDES $3,425 OF DISTRIBUTIONS
ON PREFERRED SECURITIES OF SUBSIDIARY TRUST AND $301
OF PREFERRED DIVIDEND REQUIREMENTS OF SUBSIDIARY.
<F8> NET INCOME IS AFTER INCOME TAXES OF $32,227.
<F9> PREFERRED STOCK DIVIDENDS ARE INCLUDED IN TOTAL INTEREST
EXPENSE.
SEE FINANCIAL STATEMENTS AND NOTES IN THE ACCOMPANYING 10-Q.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF
WISCONSIN ENERGY CORPORATION FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE
REFLECTS RECLASSIFICATION OF AMOUNTS TO CONFORM TO
THE COMPANY'S CURRENT FINANCIAL STATEMENT PRESENTATION.
<S> <C>
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> <F1> 3,232,691
<OTHER-PROPERTY-AND-INVEST> <F2> 1,109,736
<TOTAL-CURRENT-ASSETS> 673,400
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 478,611
<TOTAL-ASSETS> 5,494,438
<COMMON> 1,163
<CAPITAL-SURPLUS-PAID-IN> 777,899
<RETAINED-EARNINGS> <F3> 1,151,239
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,930,301
0
30,450
<LONG-TERM-DEBT-NET> 1,174,534
<SHORT-TERM-NOTES> 50,965
<LONG-TERM-NOTES-PAYABLE> 402,907
<COMMERCIAL-PAPER-OBLIGATIONS> 115,975
<LONG-TERM-DEBT-CURRENT-PORT> 96,728
0
<CAPITAL-LEASE-OBLIGATIONS> 188,938
<LEASES-CURRENT> 25,848
<OTHER-ITEMS-CAPITAL-AND-LIAB> <F4> 1,477,792
<TOT-CAPITALIZATION-AND-LIAB> 5,494,438
<GROSS-OPERATING-REVENUE> 556,717
<INCOME-TAX-EXPENSE> 28,389
<OTHER-OPERATING-EXPENSES> 456,401
<TOTAL-OPERATING-EXPENSES> <F5> 456,401
<OPERATING-INCOME-LOSS> <F5> 100,316
<OTHER-INCOME-NET> 13,779
<INCOME-BEFORE-INTEREST-EXPEN> <F7> 114,095
<TOTAL-INTEREST-EXPENSE> <F6> 32,195
<NET-INCOME> <F7> 53,511
<F8> 0
<EARNINGS-AVAILABLE-FOR-COMM> 53,511
<COMMON-STOCK-DIVIDENDS> 45,169
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 151,869
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.46
<FN>
<F1> TOTAL NET UTILITY PLANT IS $3,515,756 OF NET PROPERTY,
PLANT AND EQUIPMENT LESS $283,065 OF NET NON-UTILITY
PROPERTY.
<F2> OTHER PROPERTY AND INVESTMENTS IS $826,671 OF INVESTMENTS
PLUS $283,065 OF NET NON-UTILITY PROPERTY.
<F3> RETAINED EARNINGS IS NET OF $1,195 OF UNEARNED COMPENSATION
FOR RESTRICTED STOCK AWARDS.
<F4> OTHER ITEMS - CAPITAL AND LIABILITIES INCLUDES $200,000
OF COMPANY-OBLIGATED, MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY DEBENTURES
OF THE COMPANY.
<F5> TOTAL OPERATING EXPENSES AND OPERATING INCOME OR LOSS
EXCLUDES INCOME TAXES OF $28,389.
<F6> TOTAL INTEREST EXPENSE INCLUDES $228 OF DISTRIBUTIONS ON
PREFERRED SECURITIES OF SUBSIDIARY TRUST AND $301 OF
PREFERRED DIVIDEND REQUIREMENTS OF SUBSIDIARY.
<F7> INCOME BEFORE INTEREST EXPENSE AND NET INCOME IS AFTER
INCOME TAXES OF $28,389.
<F8> PREFERRED STOCK DIVIDENDS ARE INCLUDED IN TOTAL INTEREST
EXPENSE.
SEE FINANCIAL STATEMENTS AND NOTES IN THE ACCOMPANYING 10-Q.
</FN>
</TABLE>
