Exhibit 10.1
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
PLAN DOCUMENT
Originally Effective January 1, 2001, and as
Amended and Restated as of January 1, 2002
and as Further Amended on March 1, 2002
TABLE OF CONTENTS
Page
PURPOSE
ARTICLE 1 DEFINITIONS
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY
2.1 Selection by Committee
2.2 Enrollment Requirements
2.3 Eligibility; Commencement of Participation
2.4 Termination of Participation and/or Deferrals
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY
MATCHING/CREDITING/TAXES
3.1 Maximum Deferral
3.2 Election to Defer; Effect of Election Form
3.3 Withholding of Annual Deferral Amounts
3.4 Annual Company Contribution Amount
3.5 Annual Company Matching Amount
3.6 Stock Option Amount
3.7 Restricted Stock Amount
3.8 Rollover Amount
3.9 Investment of Trust Assets
3.10 Sources of Stock
3.11 Vesting
3.13 FICA and Other Taxes
3.14 Distributions
ARTICLE 4 IN SERVICE PAYOUT; UNFORESEEABLE FINANCIAL
EMERGENCIES; WITHDRAWAL ELECTION
4.1 In Service Payout
4.2 Other Benefits Take Precedence Over In Service
4.3 Withdrawal Payout/Suspensions for Unforeseeable
Financial Emergencies
4.4 Withdrawal Election
ARTICLE 5 RETIREMENT BENEFIT
5.1 Retirement Benefit
5.2 Payment of Retirement Benefit
5.3 Death Prior to Completion of Retirement Benefit
5.4 Special "Make Whole" Benefits
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT
6.1 Pre-Retirement Survivor Benefit
6.2 Payment of Pre-Retirement Survivor Benefit
ARTICLE 7 TERMINATION BENEFIT
7.1 Termination Benefit
7.2 Payment of Termination Benefit
ARTICLE 8 DISABILITY WAIVER AND BENEFIT
8.1 Disability Waiver
8.2 Continued Eligibility; Disability Benefit
ARTICLE 9 BENEFICIARY DESIGNATION
9.1 Beneficiary
9.2 Beneficiary Designation; Change
9.3 Acknowledgment
9.4 No Beneficiary Designation
9.5 Doubt as to Beneficiary
9.6 Discharge of Obligations
ARTICLE 10 LEAVE OF ABSENCE
10.1 Paid Leave of Absence
10.2 Unpaid Leave of Absence
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION
11.1 Termination
11.2 Amendment
11.3 Effect of Payment
ARTICLE 12 ADMINISTRATION
12.1 Committee Duties
12.2 Administration Upon Change In Control
12.3 Agents
12.4 Binding Effect of Decisions
12.5 Indemnity of Committee
12.6 Employer Information
12.7 Coordination with Other Benefits
ARTICLE 13 CLAIMS PROCEDURES
13.1 Presentation of Claim
13.2 Notification of Decision
13.3 Review of a Denied Claim
13.4 Decision on Review
13.5 Legal Action
ARTICLE 14 TRUST
14.1 Establishment of the Trust
14.2 Interrelationship of the Plan and the Trust
14.3 Distributions From the Trust
ARTICLE 15 MISCELLANEOUS
15.1 Status of Plan
15.2 Unsecured General Creditor
15.3 Employer's Liability
15.4 Nonassignability
15.5 Not a Contract of Employment
15.6 Furnishing Information
15.7 Terms
15.8 Captions
15.9 Governing Law
15.10 Notice
15.11 Successors
15.12 Validity
15.13 Incompetent
15.14 Court Order
15.15 Distribution in the Event of Taxation
15.16 Insurance
15.17 Legal Fees To Enforce Rights After Change in Control
15.18 Payout Under Special Circumstances
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 2001
(and as Amended and Restated as of January 1, 2002
and as Further Amended on March 1, 2002)
Purpose
The purpose of this Plan is to provide specified benefits to
a select group of management and highly compensated Employees who
contribute materially to the continued growth, development and
future business success of Wisconsin Energy Corporation, a
Wisconsin corporation, and its subsidiaries, if any, that sponsor
this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent
from the context, the following phrases or terms shall have the
following indicated meanings:
1.1 "Account Balance" shall mean, with respect to a Participant,
a credit on the records of the Employer equal to the sum of
(i) the Deferral Account balance, (ii) the vested Company
Contribution Account balance, (iii) the Company Matching
Account balance, (iv) the Stock Option Account balance, (v)
the Restricted Stock Account balance and (vi) the Rollover
Account balance. The Account Balance, and each other
specified account balance, shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement
and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary, pursuant
to this Plan.
1.2 "Annual or Long-Term Performance Award" shall mean any
compensation, in addition to Base Annual Salary relating to
services performed during any calendar year, whether or not
paid in such calendar year or included on the form W-2 for
such calendar year, payable to a Participant as an Employee
under any Employer's annual performance award and cash
incentive plans, including any long-term incentive plans as
may be in existence from time to time, but excluding
Severance Payments, stock options, restricted stock and SERP
Payments.
1.3 "Annual Company Contribution Amount" shall mean, for any one
Plan Year, the amount determined in accordance with Section
3.4.
1.4 "Annual Company Matching Amount" for any one Plan Year shall
be the amount determined in accordance with Section 3.5.
1.5 "Annual Deferral Amount" shall mean that portion of a
Participant's Base Annual Salary, Annual or Long-Term
Performance Award, Severance Payments and/or SERP Payments
that a Participant elects to have, and is deferred, in
accordance with Article 3, for any one Plan Year. Except
with respect to Severance Payments and SERP Payments, in the
event of a Participant's Retirement, Disability (if
deferrals cease in accordance with Section 8. 1), death
or a Termination of Employment prior to the end of a Plan
Year, such year's Annual Deferral Amount shall be the actual
amount withheld prior to such event.
1.6 "Annual Installment Method" shall be an annual installment
payment over the number of years selected by the
Participant, not to exceed 20, in accordance with this Plan,
as set forth below. In each case, the Account Balance of the
Participant shall be calculated as of the close of business
on the last business day of the year. Each annual
installment, regardless of the method selected, shall be
payable within 30 days after February 1st of each year. The
alternative methods allowable are as follows:
(a) Fractional Method. The annual installment shall be
calculated by multiplying this balance by a fraction,
the numerator of which is one, and the denominator of
which is the remaining number of annual payments due
the Participant. By way of example, if the Participant
elects a 10 year Annual Installment Method, the first
payment shall be 1/10 of the Account Balance,
calculated as described in this definition. The
following year, the payment shall be 1/9 of the Account
Balance, calculated as described in this definition.
(b) Percentage or Fixed Dollar Method. The annual
installment shall be calculated by multiplying this
balance in the case of the percentage method, by the
percentage selected by the Participant and paying out
the resulting amount, or in the case of the fixed
dollar method, by paying out the fixed dollar amount
selected by the Participant, for the number of years
selected by the Participant. However, in the event the
dollar amount selected is greater than the Account
Balance in any given year, the entire Account Balance
will be distributed. Further, regardless of the method
selected by the Participant, the final installment
payment will include 100% of the then remaining Account
Balance.
(c) Special Installment Method. Under this alternative
method, the Participant selects both the number of
years and a specified interest rate, which is then used
to calculate a level fixed dollar amount of annual
payouts which would exhaust the Account Balance over
such number of years, if actual performance of the
elected Measurement Funds were identical to the
specified interest rate. However, in recognition of the
fact that such exact conformity is unlikely, in the
event the calculated level fixed dollar amount is
greater than the Account Balance in any given year, the
entire Account Balance will be distributed. Further,
the final installment payment will include 100% of the
then remaining Account Balance.
1.7 "Annual Restricted Stock Amount" shall mean, with respect to
a Participant for any one Plan Year, the value of unvested
restricted stock under any Company stock incentive plan,
deferred in accordance with Section 3.7 of this Plan.
1.8 "Annual Stock Option Amount" shall mean, with respect to a
Participant for any one Plan Year, the amount of Qualifying
Gains deferred on Eligible Stock Option exercise in
accordance with Section 3.6 of this Plan, calculated using
the average of the reported high and low prices for the
Stock as of the day of exercise (if a business day) or as of
the next following business day.
1.9 "Base Annual Salary" shall mean the annual cash compensation
relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the
form W-2 for such calendar year, excluding Severance
Payments, SERP Payments, performance awards, bonuses,
commissions, overtime, fringe benefits, stock options,
relocation expenses, incentive payments, non-monetary
awards, directors fees and other fees, automobile and other
allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the
Employee's gross income). Base Annual Salary shall be
calculated before reduction for compensation voluntarily
defer-red or contributed by the Participant pursuant to all
qualified or non-qualified plans of any Employer and shall
be calculated to include amounts not otherwise included in
the Participant's gross income under Code Sections 125,
402(e)(3), 402(h), or 403(b) pursuant to plans established
by any Employer; provided, however, that all such amounts
will be included in compensation only to the extent that,
had there been no such plan, the amount would have been
payable in cash to the Employee.
1.10 "Beneficiary" shall mean one or more persons, trusts,
estates or other entities, designated in accordance with
Article 9, that are entitled to receive benefits under this
Plan upon the death of a Participant.
1.11 "Beneficiary Designation Form" shall mean the form
established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries.
1.12 "Board" shall mean the board of directors of the Company.
1.13 "Change in Control" with respect to the Company shall mean
the occurrence of any one of the events set forth below:
(a) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities beneficially owned by such
Person any securities acquired directly from the
Company or its affiliates) representing 20% or more of
the combined voting power of the Company's then
outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (c)
below; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a
director whose initial assumption of office is in
connection with an actual or threatened election
contest, including but not limited to a consent
solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board
or nomination for election by the Company's
shareholders was approved or recommended by a vote of
at least two-thirds (0) of the directors then still in
office who either were directors on the date hereof or
whose appointment, election or nomination for election
was previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (i) a
merger or consolidation immediately following which the
directors of the Company
immediately prior to such merger or consolidation
continue to constitute at least a majority of the board
of directors of the Company, the surviving entity or
any parent thereof or (ii) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the
securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding
securities; or
(d) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement (or series of related
agreements) for the sale or disposition by the Company
of all or substantially all of the Company's assets,
disregarding any sale or disposition to a company at
least a majority of the directors of which were
directors of the Company immediately prior to such sale
or disposition; or
(e) the Board of Directors of the Company determines in its
sole and absolute discretion that there has been a
Change in Control of the Company.
For purposes of this Change in Control definition, the terms
set forth below shall have the following meanings:
"Beneficial Owner" shall have the meaning set forth in
Rule l3d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
"Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of the stock of the Company.
1.14 "Chief Executive Officer or CEO" shall mean the Chief Executive Officer
of the Company.
1.15 "Claimant" shall have the meaning set forth in Section 13. 1.
1.16 "Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
1.17 "Committee" shall mean an internal administrative committee
appointed by the CEO to administer the Plan described in
Article 12.
1.18 "Company" shall mean Wisconsin Energy Corporation, a
Wisconsin corporation, and any successor to all or
substantially all of the Company's assets or business.
1.19 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii)
amounts credited in accordance with all the applicable
crediting provisions of this Plan that relate to the
Participant's Company Contribution Account, less (iii) all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Company Contribution Account.
1.20 "Company Matching Account" shall mean (i) the sum of all of
a Participant's Annual Company Matching Amounts, plus (ii)
amounts credited in accordance with all the applicable
crediting provisions of this Plan that relate to the
Participant's Company Matching Account, less (iii) all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Company Matching Account.
1.21 "Deduction Limitation" shall mean the following described
limitation on a benefit that may otherwise be distributable
pursuant to the provisions of this Plan. Except as otherwise
provided, this limitation shall be applied to all
distributions that are "subject to the Deduction Limitation"
under this Plan. If an Employer determines in good faith
prior to a Change in Control that there is a reasonable
likelihood that any compensation paid to a Participant for a
taxable year of the Employer would not be deductible by the
Employer solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the
Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior
to the Change in Control is deductible, the Employer may
defer all or any portion of a distribution under this Plan.
Any amounts deferred pursuant to this limitation shall
continue to be credited/debited with additional amounts in
accordance with Section 3.13 below, even if such amount is
being paid out in installments. The amounts so deferred and
amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as
determined by the Employer in good faith, on which the
deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during
which the distribution is made will not be limited by
Section 162(m), or if earlier, the effective date of a
Change in Control. Notwithstanding anything to the contrary
in this Plan, the Deduction Limitation shall not apply to
any distributions made after a Change in Control.
1.22 "Deferral Account" shall mean (i) the sum of all of a
Participant's Annual Deferral Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting
provisions of this Plan that relate to the Participant's
Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan
that relate to his or her Deferral Account.
1.23 "Disability" shall mean a period of disability during which
a Participant is unable to perform the material duties of
his or her job, as determined by the Committee in its sole
discretion.
1.24 "Disability Benefit" shall mean the benefit set forth in
Article 8.
1.25 "Election Form" shall mean the form established from time to
time by the Committee that a Participant completes, signs
and returns to the Committee to make an election under the
Plan. To the extent authorized by the Committee, such form
may be electronic or set forth in some other media and need
not be signed by a Participant.
1.26 "Eligible Stock Option" shall mean one or more non-qualified
stock option(s) selected by the Committee in its sole
discretion and exercisable under a plan or arrangement of
any Employer permitting a Participant under this Plan to
defer gain with respect to such option.
1.27 "Employee" shall mean a person who is an employee of any
Employer.
1.28 "Employer(s)" shall mean the Company and/or any of its
subsidiaries (now in existence or hereafter formed or
acquired) that have been selected by the Board to
participate in the Plan and have adopted the Plan as a
sponsor.
1.29 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.30 "In Service Payout" shall mean the payout set forth in
Section 4. 1.
1.31 "Inactive Participant" shall mean an individual who at one
point was a Participant in the Plan or a predecessor
non-qualified deferred compensation plan and has an
undistributed Account Balance, but is no longer eligible to
make deferral elections under the Plan by reason of such
individual's removal under Section 2.4 hereof or otherwise.
1.32 "401(k) Plan" shall refer to all tax-qualified profit
sharing plans maintained by an Employer that incorporate
provisions for elective deferral contributions by
participating employees in accordance with Section 401(k) of
the Code.
1.33 "Participant" shall mean any Employee or Retired Employee of
any Employer (i) who is selected to participate in the Plan
and who has not been removed, and (ii) who commences
participation in the Plan. A spouse or former spouse of a
Participant shall not be treated as a Participant in the
Plan or have an account balance under the Plan, even if he
or she has an interest in the Participant's benefits under
the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.34 "Plan" shall mean the Company's Executive Deferred
Compensation Plan.
1.35 "Plan Year" shall mean a period beginning on January I of
each calendar year and continuing through December 31 of
such calendar year.
1.36 "Pre-Retirement Survivor Benefit" shall mean the benefit set
forth in Article 6.
1.37 "Qualifying Gain" shall mean the value accrued upon exercise
of an Eligible Stock Option (i) using a Stock-for-Stock
payment method and (ii) having an aggregate fair market
value in excess of the total Stock purchase price necessary
to exercise the option. In other words, the Qualifying Gain
upon exercise of an Eligible Stock Option equals the total
market value of the shares (or share equivalent units)
acquired minus the total stock purchase price. For example,
assume a Participant elects to defer the Qualifying Gain
accrued upon exercise of an Eligible Stock Option to
purchase 1000 shares of Stock at an exercise price of $20
per share, when Stock has a current fair market value of $25 per
share. Using the Stock-for-Stock payment method, the
Participant would deliver 800 shares of Stock (worth
$20,000) to exercise the Eligible Stock Option and receive,
in return, 800 shares of Stock plus a Qualifying Gain (in
this case, in the form of an unfunded and unsecured promise
to pay money or property in the future) equal to $5,000
(i.e., the current value of the remaining 200 shares of
Stock).
1.38 "Restricted Stock" shall mean unvested shares of restricted
stock selected by the Committee in its sole discretion and
awarded to the Participant under any Company stock incentive
plan.
1.39 "Restricted Stock Account" shall mean (i) the sum of the
Participant's Annual Restricted Stock Amounts, plus (ii)
amounts credited/debited in accordance with all the
applicable crediting/debiting provisions of this Plan that
relate to the Participant's Restricted Stock Account, less
(iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the
Participant's Restricted Stock Account.
1.40 "Restricted Stock Amount" shall mean, for any grant of
Restricted Stock, the amount of such Restricted Stock
deferred in accordance with Section 3.7 of this Plan,
calculated using the average of the reported high and low
prices for the Stock as of the day such Restricted Stock
would otherwise vest (if a business day) or as of the next
following business day.
1.41 "Retirement", "Retire(s)" or "Retired" shall mean, with
respect to an Employee, severance from employment from all
Employers for any reason other than a leave of absence,
death or Disability on or after the attainment of age
fifty-five (55).
1.42 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.43 "Rollover Account" shall mean a Participant's Rollover
Amount, plus amounts credited/debited in accordance with all
the applicable crediting/debiting provisions of this Plan
that relate to the Participant's Rollover Account, less all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Rollover Account
1.44 "Rollover Amount" shall mean the amount determined in
accordance with Section 3.8.
1.45 "Severance Payments" shall mean any post-termination amounts
due a Participant in any calendar year under the Company's
Special Executive Severance Policy or Executive Severance
Policy or under any change in control contract between the
Company and an Employee, on account of his or her
Termination of Employment, whether or not paid in such
calendar year or included on the form W-2 for such calendar
year.
1.46 "SERP Payments" shall mean any distributions due a
Participant in any calendar year resulting from his or her
participation in the Wisconsin Energy Corporation
Supplemental Executive Retirement Plan, whether or not paid
in such calendar year or included on the form W-2 for such
calendar year.
1.47 "Stock" shall mean Wisconsin Energy Corporation common stock.
1.48 "Stock Option Account" shall mean the sum of (i) the
Participant's Annual Stock Option Amounts, plus (ii) amounts
credited/debited in accordance with all the applicable
crediting/debiting provisions of this Plan that relate to
the Participant's Stock Option Account, less (iii) all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Stock Option Account.
1.49 "Stock Option Amount" shall mean, for any Eligible Stock
Option, the amount of Qualifying Gains deferred in
accordance with Section 3.6 of this Plan, calculated using
the average of the reported high and low prices for the
Stock as of the day of exercise (if a business day) or as of
the next following business day.
1.50 "Termination Benefit" shall mean the benefit set forth in
Article 7.
1.51 "Termination of Employment" shall mean the severing of
employment with all Employers, voluntarily or involuntarily,
for any reason other than Retirement, Disability, death or
an authorized leave of absence. However, if an Employee
leaves employment with all Employers in connection with such
Employee's immediate transfer to and acceptance of
employment with another employer which is providing services
essential to the utilities business conducted by the Company
or an Employer, then such Employee will not be considered to
have incurred a Termination of Employment. Instead, such
Employee will be deemed to be continuing in the employ of an
Employer for purposes of the Plan for so long as such
Employee remains in the employ of such other employer and
such employer continues to provide such services.
1.52 "Trust" shall mean the Wisconsin Energy Corporation Rabbi
Trust Agreement dated December 1, 2000 between the Company
and The Northern Trust Company, and as amended from time to
time.
1.53 "Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by an event beyond
the control of the Participant that would result in severe
financial hardship to the Participant resulting from (i) a
sudden and unexpected illness or accident of the Participant
or a dependent of the Participant, (ii) a loss of the
Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, all
as determined in the sole discretion of the Committee.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be
limited to a select group of management and highly
compensated Employees of the Employers, as determined by the
Committee. From that group, the Committee shall select
Employees to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation,
each selected Employee shall complete, execute and return to
the Committee an Election Form and any other relevant forms
within such time periods as the Committee may prescribe. In
addition, the Committee
shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are
necessary.
2.3 Eligibility; Commencement of Participation. Provided an
Employee selected to participate in the Plan has met all
enrollment requirements set forth in this Plan and required
by the Committee, including returning all required documents
to the Committee within the specified time period, that
Employee shall commence participation in the Plan on the
first day of the month following the month in which the
Employee completes all enrollment requirements.
2.4 Termination of Participation and/or Deferrals. If the
Committee determines in good faith that a Participant no
longer qualifies as a member of a select group of management
or highly compensated employees, as membership in such group
is determined in accordance with Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, the Committee shall have the right,
in its sole discretion, to (i) terminate any deferral
election the Participant has made for the remainder of the
Plan Year in which the Participant's membership status
changes, (ii) prevent the Participant from making future
deferral elections and/or (iii) immediately distribute the
Participant's then Account Balance as a Termination Benefit
and terminate the Participant's participation in the Plan.
The Committee may also remove a Participant from continuing
participation in the Plan at any time in its sole discretion
and such individual shall become an Inactive Participant to
the extent he or she still has an undistributed Account
Balance.
ARTICLE 3
Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Maximum Deferral.
(a) Base Annual Salary, Annual or Long-Term Performance
Award, Severance Payments and/or SERP Payments. For
each Plan Year, a Participant may elect to defer, as
his or her Annual Deferral Amount, Base Annual Salary,
Annual or Long-Term Performance Award, Severance
Payments, and/or SERP Payments up to the following
maximum percentages for each deferral elected:
Deferral Maximum
Percentage
Base Annual Salary 100%
Annual or Long-Term Performance award 100%
Severance Payments 100%
SERP Payments 100%
Notwithstanding the foregoing, the Participant may change his or
her election with respect to the Base Annual Salary portion of
the Annual Deferral Amount on a monthly basis, by timely
delivering to the Committee in accordance with its rules and
procedures, before the end of the month preceding the month for
which the election will be effective, a new Election Form for
such purpose. Notwithstanding any other provision of this Plan,
any Election form or revocation will be given prospective effect
only and may not affect prior deferrals.
(b) For each Eligible Stock Option, a Participant may elect
to defer, as his or her Stock Option Amount, up to 100%
of the Qualifying Gain with respect to exercise of the
Eligible Stock Option. Stock Option Amounts may also be
limited by other terms or conditions set forth in the
stock option plan or agreement under which such options
are granted.
(c) A Participant may elect to defer up to 100% of his or
her Restricted Stock.
3.2 Election to Defer; Effect of Election Form.
(a) Base Annual Salary. A Participant's Election Form with
respect to Base Annual Salary shall be filed with the
Committee in accordance with its rules, but in no event
later than the end of the month preceding the month for
which the election will be effective. As noted above in
Section 3.1(a), a Participant may subsequently change
or revoke his or her election with respect to Base
Annual Salary, but only with prospective effect only,
to take effect as of the first day of the month
immediately following receipt of the new Election Form
by the Committee. Therefore, any Election Form shall be
irrevocable with respect to the portion of Base Annual
Salary deferral during the period of time covered by
such Form.
(b) Annual or Long-Term Performance Award. A Participant's
Election Form with respect to Annual Performance Award
shall be filed with the Committee in accordance with
its rules, but in no event later than November 30th of
any calendar year with respect to all or any part of an
Annual Performance Award that might otherwise become
payable on account of a Participant's services during
such calendar year and in all events prior to the time
that the Participant has earned an absolute and
unconditional right to payment. Any such Election Form
which is on file with the Committee on November 30th of
a calendar year shall become irrevocable as of such
date. When and as a Long-Term Performance Award program
is put into place, the Committee will establish rules
for a Participant's Election Form similar to the above,
and providing that such Election Form must be filed in
all events prior to the time that the Participant has
earned an absolute and unconditional right to payment
and that such Election Form may not be revoked by the
Participant once the filing deadline date has passed.
(c) Severance Payments. A Participant's Election Form with
respect to Severance Payments shall be filed with the
Committee in accordance with its rules and the rules
for a prior deferral election set forth in the
documents or contracts providing for Severance
Payments.
(d) SERP Payments. A Participant's Election Form with
respect to SERP Payments shall be filed with the
Committee in accordance with its rules and any rules
for a prior deferral election set forth in the SERP.
However, notwithstanding any contrary provisions in the
SERP, a Participant who is a participant in the SERP
shall be allowed to both elect that a lump sum method
of payment be made to such Participant at the time when
payments are to commence under the terms of the SERP
(the "SERP Starting Date") for the SERP "A" or "B"
benefits or that such a lump sum be determined and then
credited to such Participant's Account Balance under
this Plan as of the SERP Starting Date with such
Participant to be treated as having then "Retired"
for purpose of this Plan (so that the Participant's
election for a method of payout under Article 5 shall
govern), provided that such an Election Form filed by
the Participant with regard to the SERP is submitted to
the Committee at least one year prior to the SERP
Starting Date.
(e) Stock Option Deferral. For an election to defer gain
upon an Eligible Stock Option exercise to be valid: (i)
a separate Election Form must be completed and signed
by the Participant with respect to the Eligible Stock
Option; (ii) the Election Form must be timely delivered
to the Committee and accepted by the Committee at least
six (6) months prior to the date the Participant elects
to exercise the Eligible Stock Option; and (iii) the
Eligible Stock Option must be exercised using an actual
or phantom Stock-for-Stock payment method.
(f) Restricted Stock. For an election to defer Restricted
Stock Amounts to be valid: (i) a separate irrevocable
Election Form must be completed and signed by the
Participant, with respect to such Restricted Stock; and
(ii) such Election Form must be timely delivered to the
Committee and accepted by the Committee at least six
(6) months prior to the date such Restricted Stock
vests under the terms of the Company's stock incentive
plan.
3.3 Withholding of Annual Deferral Amounts. For each Plan Year,
the Base Annual Salary portion of the Annual Deferral Amount
shall be withheld from each regularly scheduled Base Annual
Salary payroll in equal amounts, as adjusted from time to
time for increases and decreases in Base Annual Salary. The
Annual or Long-Term Performance Award, Severance Payments
and SERP Payments portion of the Annual Deferral Amount
shall be withheld at the time the Annual or Long-Term
Performance Award, Severance Payments and/or SERP Payments
are or otherwise would be paid to the Participant, whether
or not this occurs during the Plan Year itself.
3.4 Annual Company Contribution Amount. For each Plan Year, an
Employer, in its sole discretion, may, but is not required
to, credit any amount it desires to any Participant's
Company Contribution Account under this Plan, which amount
shall be for that Participant the Annual Company
Contribution Amount for that Plan Year. The amount so
credited to a Participant may be smaller or larger than the
amount credited to any other Participant, and the amount
credited to any Participant for a Plan Year may be zero,
even though one or more other Participants receive an Annual
Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as of
the last day of the Plan Year. If a Participant is not
employed by an Employer as of the last day of a Plan Year
other than by reason of his or her Retirement or death while
employed, the Annual Company Contribution Amount for that
Plan Year shall be zero, unless the Employer in its sole
discretion determines otherwise.
3.5 Annual Company Matching Amount. A Participant's Annual
Company Matching Amount for any Plan Year shall be made for
any Participant who elects some deferral of Base Annual
Salary into this Plan. Prior to January 1, 2002, the Annual
Company Matching Amount will depend on the structure of the
relevant Employer's 401(k) Plan which applies to the
Participant. To determine the Annual Company Matching
Amount, it is necessary to identify the relevant Employer
401(k) Plan matching rate (the "Matching Rate") and the
percentage of compensation deferral subject to such matching
rate (the "Eligible Compensation
Percentage"). From and after January 1, 2002, the Annual
Company Matching Amount will be determined by using the
Matching Rate and the Eligible Compensation Percentage that
applies to the Wisconsin Energy Corporation Employee
Retirement Savings Plan, regardless of the actual 401(k)
plan, if any, that applies to the Participant. In the
Wisconsin Energy Corporation Employee Retirement Savings
Plan, the Matching Rate is 50% and the Eligible Compensation
Percentage is 6%. The formula for a Participant's Annual
Company Matching Amount is: the Matching Rate multiplied
times "X", where X is the difference between the Eligible
Compensation Percentage times the Participant's gross
compensation eligible for matching under the relevant
Employer 401(k) Plan before any reduction for deferrals of
Base Annual Salary under this Plan and without regard to any
Code limitations, and the Participant's "Deemed Maximum
Elective Deferral ("DMED"). The DMED for any Participant
is equal to the Eligible Compensation Percentage multiplied
by such Participant's gross compensation eligible for matching
under the relevant Employer 401(k) Plan, reduced by deferrals
of Base Annual Salary under this Plan [but limited to the
maximum compensation that can be considered under Code Section
401(a)(17) ($200,000 for 2002)], provided that the result
must be limited to the maximum allowable elective deferral
permitted under Code Section 402(g) ($11,000 for 2002) plus the
maximum allowable catch-up contribution under Code Section
414(v) ($1,000 for 2002).
For example, assume 2 Participants, A, who is age 50 or older
and eligible for catch-up contributions, and B, who is under 50,
with gross Annual Base Salary of $300,000 and $150,000, who
each choose to defer 6% into this Plan. Both are covered or
deemed to be covered by the Wisconsin Energy Corporation
Employee Retirement Savings Plan. The Annual Company Matching
Amount for each under this Plan is calculated as follows:
Matching Rate 50% Eligible Compensation Percentage 6%
DMED for A is 6% x $200,000 or $12,000
DMED for B is 6% x [$150,000-9,000] or $8,460
Annual Matching Amount for A is 50% of "X,"
where "X' is 6% x $300,000 or $18,000
less DMED of 12,000
-------
6,000
Therefore A's Annual Matching Amount is
50% x $6,000 or $3,000
Annual Matching Amount for B is 50% of "X,"
where "X" is 6% of $150,000 or $9,000
less DMED of 8,460
------
540
Therefore B's Annual Matching Amount is
50% x $540 or $270
For the year 2001 only, notwithstanding any other provision
of this Plan, a Participant will automatically receive a
Company Matching Amount equal to X times Y, where X equals
the Matching Rate multiplied by the Eligible Compensation
Percentage, and Y equals the amount of any Annual
Performance Award, without regard to whether any part of the
same is deferred under this Plan.
If in any case the relevant 401(k) Plan does not operate
on the calendar year, the Committee in its sole discretion
shall determine how the Participant's Annual Company
Matching Amount shall be determined for any Participant who
elects some deferral of Base Annual Salary into this Plan.
The Committee may modify the method of calculating the
Annual Matching Amount to take into account periodic credits
rather than annual calculations, consistent with the
principles expressed herein.
3.6 Stock Option Amount. Subject to any terms and conditions
imposed by the Committee Participants may elect to defer,
under the Plan, Qualifying Gains attributable to an Eligible
Stock Option exercise. Stock Option Amounts shall be
credited/debited to the Participant on the books of the
Employer at the time Stock would otherwise have been
delivered to the Participant pursuant to the Eligible Stock
Option exercise, but for the election to defer.
3.7 Restricted Stock Amount. Subject to any terms and
conditions imposed by the Committee, Participants may elect
to defer, under the Plan, Restricted Stock Amounts.
Restricted Stock Amounts shall be credited to the
Participant on the books of the Employer in connection with
such an election at the time the Restricted Stock would
otherwise vest under the terms of the Company's stock
incentive plan, but for the election to defer.
3.8 Rollover Amount. If a Participant or an individual was a
participant in the Company's Executive Deferred Compensation
Plan, the Wisconsin Gas Company Restoration Plan or any
other non-qualified deferred compensation plan of the
Company or its affiliates (the "Prior Plans") and had an
undistributed account balance in such plans as of a relevant
determination date, and such person has become a Participant
or Inactive Participant in this Plan, then such account
balance, determined as of that date, shall be transferred on
such date to and be added to the Participant's or Inactive
Participant's Account Balance under this Plan, and shall
thereafter, subject to any necessary consents due to the
terms of the Prior Plans, be governed by the terms and
conditions of this plan, and shall be referred to as the
"Rollover Amount." However, notwithstanding any other
provisions of this Plan, the Account Balance of any Inactive
Participant (or beneficiary thereof) who was not a
continuing employee of an Employer on or after January 1,
2001 shall continue to be administered and distributed as
provided under the terms of the relevant Prior Plan (unless
and to the extent otherwise determined by the Committee in
its sole discretion in a manner consistent with the terms of
the relevant Prior Plan). Further, the Account Balance of
any individual who was a participant in any Prior Plan who
continues as an employee of an employer on or after January
1, 2001 and has become a Participant or Inactive Participant
in this Plan will remain subject to the distribution method
elected under the relevant Prior Plan unless and until a new
distribution method has been elected under this Plan and
become effective.
3.9 Investment of Trust Assets. The Trustee of the Trust shall
be authorized, upon written instructions received from the
Committee or investment manager appointed by the Committee,
to invest and reinvest the assets of the Trust in accordance
with the applicable
Trust Agreement, including the disposition of Stock and
reinvestment of the proceeds in one or more investment
vehicles designated by the Committee.
3.10 Sources of Stock. If Stock is credited under the Plan in
the Trust in connection with an Eligible Stock Option
exercise or in connection with a deferral of Restricted
Stock, the shares so credited shall be deemed to have
originated, and shall be counted against the number of
shares reserved, under such other plan, program or
arrangement.
3.11 Vesting.
(a) A Participant shall at all times be 100% vested in his
or her Deferral Account, Stock Option Account,
Restricted Stock Account, Company Matching Account and
Rollover Account.
(b) A Participant shall be vested in his or her Company
Contribution Account in accordance with the vesting
schedule, if any, contained in his or her Election
Form.
(c) In the event of a Change in Control, a Participant's
Company Contribution Account shall immediately become
100% vested.
(d) Notwithstanding subsection (c), the vesting schedule
for a Participant's Company Contribution Account shall
not be accelerated to the extent that the Committee
determines that such acceleration would cause the
deduction limitations of Section 28OG of the Code to
become effective. In the event that all of a
Participant's Company Contribution Account is not
vested pursuant to such a determination, the
Participant may request independent verification of the
Committee's calculations with respect to the
application of Section 280G. In such case, the
Committee must provide to the Participant within 15
business days of such a request an opinion (which need
not be unqualified) of the Company's independent
auditors which opinion shall state that any limitation
in the vested percentage hereunder is necessary to
avoid the limits of Section 280G and contain supporting
calculations. The cost of such opinion shall be paid
for by the Company.
3.12 Crediting/Debiting of Account Balances. Subject to Section
3.12(f) and (g) below, and accordance with, and subject to,
the rules and procedures that are established from time to
time by the Committee in its sole discretion, amounts shall
be credited or debited to a Participant's Account Balance in
accordance with the following rules:
(a) Election of Measurement Funds. Subject to Section
3.12(f) and (g) below, a Participant, in connection
with his or her initial deferral election in accordance
with Section 3.2 above, shall elect, on the Election
Form, one or more Measurement Fund(s) (as described in
Section 3.12(c) below) to be used to determine the
additional amounts to be credited to his or her Account
Balance for the first day in which the Participant
commences participation in the Plan and continuing
thereafter for each subsequent business day in which
the Participant participates in the Plan, unless
changed in accordance with the next sentence. Subject
to Section 3.12(f) and (g) below, commencing with the
first business day that follows the Participant's
commencement of participation in the Plan and
continuing thereafter for each -subsequent day in which
the Participant participates in the Plan, no later than
the
close of business on such day, the Participant may (but
is not required to) elect, by submitting an Election
Form to the Committee that is accepted by the
Committee, to add or delete one or more Measurement
Fund(s) to be used to determine the additional amounts
to be credited to his or her Account Balance, or to
change the portion of his or her Account Balance
allocated to each previously or newly elected
Measurement Fund. If an election is made in accordance
with the previous sentence, it shall apply thereafter
in accordance with the rules of the Committee for all
subsequent periods in which the Participant
participates in the Plan, unless changed in accordance
with the previous provisions.
(b) Proportionate Allocation. In making any election
described in Section 3.12(a) above, the Participant
shall specify on the Election Form, in increments of
one percentage point (1%), the percentage of his or her
Account Balance to be allocated to a Measurement Fund
(as if the Participant was making an investment in that
Measurement Fund with that portion of his or her
Account Balance).
(c) Measurement Funds. Subject to Section 3.12(f) and (g)
below, the Participant may elect one or more of the
following measurement funds (the "Measurement Funds"),
for the purpose of crediting additional amounts to his
or her Account Balance: (i) any Measurement Fund
selected by the WEC Investment Trust Policy Committee
from time to time; (ii) Prime Rate Fund (described as a
mutual fund 100% invested in a hypothetical debt
instrument which earns interest at an annualized
interest rate equal to the "Prime Rate" as reported
each business day by the Wall Street Journal, with
interest deemed reinvested in additional units of such
hypothetical debt instrument); or (iii) a Company Stock
Measurement Fund (described as a mutual fund 100%
invested in shares of Company Stock, with dividends
deemed reinvested in additionalshares of Company
Stock).
Subject to Section 3.13(f) and (g) below, as necessary,
the WEC Investment Trust Policy Committee may, in its
sole discretion, discontinue, substitute or add a
Measurement Fund, subject to such advance notice to
Participants as it determines.
(d) Crediting or Debiting Method. The performance of each
elected Measurement Fund (either positive or negative)
will be determined by the Committee, in its reasonable
discretion, based on the performance of the Measurement
Funds themselves. A Participant's Account Balance shall
be credited or debited on a daily basis based on the
performance of each Measurement Fund selected by the
Participant, as determined by the Committee in its sole
discretion, as though (i) a Participant's Account
Balance were invested in the Measurement Fund(s)
selected by the Participant, in the applicable
percentages; (ii) the portion of the Annual Deferral
Amount that was actually deferred during any day were
invested in the Measurement Fund(s) selected by the
Participant, no later than the close of business on the
day on which such amounts are actually deferred; and
(iii) any distribution made to a Participant that
decreases such Participant's Account Balance ceased
being invested in the Measurement Fund(s), no earlier
than one business day prior to the distribution. The
Participant's Annual Company Matching Amount shall be
credited to his or her Company Matching Account for
purposes of this Section 3.12(d) no later than the end
of the month following the month to which such amount
relates. The Participant's Annual Stock Option
Amount(s) shall be credited to his or her Stock
Option Account no later than the close of business on
the first business day after the day on which the
Eligible Stock Option was exercised or otherwise
disposed of. The Participant's Annual Restricted Stock
Amount shall be credited to his or her Restricted Stock
Account no later than the close of business on the
first business day after the day on which the
Participant would have become vested in and received
the Restricted Stock, but for the election to defer.
(e) No Actual Investment. Notwithstanding any other
provision of this Plan that may be interpreted to the
contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant's election
of any such Measurement Fund, the allocation to his or
her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of
such amounts to a Participant's Account Balance shall
not be considered or construed in any manner as an
actual investment of his or her Account Balance in any
such Measurement Fund. In the event that the Company or
the Trustee (as that term is defined in the Trust), in
its own discretion, decides to invest funds in any or
all of the Measurement Funds, no Participant shall have
any rights in or to such investments themselves.
Without limiting the foregoing, a Participant's Account
Balance shall at all times be a bookkeeping entry only
and shall not represent any investment made on his or
her behalf by the Company or the Trust; the Participant
shall at all times remain an unsecured creditor of the
Company.
(f) Special Rule for Stock Option Account and Restricted Stock
Account. Notwithstanding any provision of this Plan that
may be construed to the contrary, the Participant's Stock
Option Account and Restricted Stock Account must be deemed
invested in the Company Stock Measurement Fund at all times
prior to distribution from this Plan. Further, the
Participant's Stock Option Account and the Restricted Stock
Account must be distributed from this Plan in the form of cash.
(g) Special Considerations for Participants Subject to
Section 16 of the Securities Exchange Act of 1934.
Prior to March 1, 2002, different rules pertained
with respect to amounts allocated to the Company Stock
Measurement Fund. The Company Matching Account had to
be deemed invested by the Company Stock Measurement Fund
at all times prior to distribution from the Plan. Such
restriction was dropped from the Plan effective as of
March 1, 2002. In order that any election by a
Participant who is an officer or director subject to the
reporting requirements and trading restrictions of
Section 16 of the Securities Exchange Act of 1934
("Section 16") will conform to Section 16, such a
Participant should consult with the designated individual
at the Company responsible for Section 16 reporting and
compliance prior to making any election to move any part
of his or her Account Balance into or out of the Company
Stock Measurement Fund. In general, compliance with
Section 16 will require that:
(i) Any election to move any part of an Account Balance
into or out of the Company Stock Measurement Fund
(including any election to receive a payout in service
under Section 4.1, in the event of Unforeseeable
Financial Emergency under Section 4.3, or under the 10%
withdrawl penalty rules of Section 4.4), which elections
will be deemed made for purposes of these provisions
only as of the date of such deemed investment transfers
or proposed payouts, should only be effected if made
at least six (6) months following the date of the most
recent "opposite way" election (as explained below)
made by such Participant with respect to this Plan or
any plan of the Company or its affiliates that also
constituted a "discretionary transaction" within the
meaning of Rule 16b-3(b)(1) under Section 16.
(ii) An "opposite way" election means (x) in case of an
election by a Participant to move any part of an
Account Balance into the Company Stock Measurement Fund,
an election that was a disposition of Company Stock or
an interest in a phantom Company Stock fund or similar
security, or (y) in case of any election by a Participant
to move any part of an Account Balance out of the Company
Stock Measurement Fund, an election that was an acquisition
of Company Stock or an interest in a phantom Company
Stock fund or similar security.
(iii) Any change of election to an alternative payout period made
under Section 5.2 or 7.2 by such a Participant may only be
given effect if it is approved by the Compensation Committee or
the Board of Directors of the Company.
The Company reserves the right to impose such restrictions as it determines
to be appropriate, in is sole discretion, on any elections, dispositions or
other matters under this Plan relating to the Company Stock Measurement
Fund in order to comply with or qualify for exemption under Section 16.
3.13 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which
an Annual Deferral Amount is being withheld from a
Participant or an Annual Company Matching Amount is
Credited to a Participant, the Participant's
Employer(s) shall withhold from that portion of the
Participant's non-deferred compensation, in a manner
determined by the Employer(s), the Participant's share
of FICA and other employment taxes on such amounts. If
necessary, the Committee may reduce the Annual Deferral
Amount in order to comply with this Section 3.13.
(b) Company Contribution Amounts. When a participant
becomes vested in a portion of his or her Company
Contribution Account, the Participant's Employer(s)
shall withhold from the Participant's non-deferred
compensation, in a manner determined by the
Employer(s), the Participant's share of FICA and other
employment taxes. If necessary, the Committee may
reduce the vested portion of the Participant's Company
Contribution Account in order to comply with this
Section 3.13.
(c) Annual Stock Option Amounts and Annual Restricted Stock
Amounts. For each Plan Year in which an Annual Stock
Option Amount or Annual Restricted Stock Amount is
being first credited to a Participant's Account
Balance, the Participant's Employer(s) shall withhold
from that portion of the Participant's non-deferred
compensation, in a manner determined by the
Employer(s), the Participant's share of FICA and other
employment taxes on such Annual Stock Option Amount or
Annual Restricted Stock Amount. If necessary, the
Committee may reduce the Annual Stock Option Amount
and/or Annual Restricted Stock Amount in order to
comply with this Section 3.13.
3.14 Distributions. The Participant's Employer(s), or the
trustee of the Trust, shall withhold from any payments made
to a Participant under this Plan all federal, state and
local income, employment and other taxes required to be
withheld by the Employer(s), or the trustee of the Trust, in
connection with such payments, in amounts and in a manner to
be determined in the sole discretion of the Employer(s) and
the trustee of the Trust.
ARTICLE 4
In Service Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 In Service Payout. In connection with each election to
defer an Annual Deferral Amount, a Participant may
irrevocably elect to receive a future "In Service Payout"
from the Plan with respect to such Annual Deferral Amount.
Subject to the Deduction Limitation, the In Service Payout
shall be a lump sum payment in an amount that is expressed
either as a fixed dollar amount or as a percentage of the
Annual Deferral Amount plus amounts credited or debited
thereto, determined at the time that the In Service Payout
becomes payable (rather than the date of a Termination of
Employment). Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each In Service
Payout elected shall be paid out during a 90 day period
commencing immediately after the last day of any Plan Year
designated by the Participant that is at least two Plan
Years after the Plan Year in which the Annual Deferral
Amount is actually deferred. By way of example, if a two
year In Service Payout is elected for Annual Deferral
Amounts that are deferred in the Plan Year commencing
January 1, 2001, the two year In Service Payout would become
payable during a 90 day period commencing January 1, 2004.
4.2 Other Benefits Take Precedence Over In Service. Should an
event occur that triggers a benefit under Article 5, 6, 7 or
8, any Annual Deferral Amount, plus amounts credited or
debited thereon, that is subject to a In Service Payout
election under Section 4.1 shall not be paid in accordance
with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may
petition the Committee to (i) suspend any deferrals required
to be made by a Participant and/or (ii) subject to the
Deduction Limitation, receive a partial or full payout from
the Plan. The payout shall not exceed the lesser of the
Participant's Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the
amount reasonably needed to satisfy the Unforeseeable
Financial Emergency. If, subject to the sole discretion of
the Committee, the petition for a suspension and/or payout
is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 90 days of the
date of approval.
4.4 Withdrawal Election. Subject to the Deduction Limitation, a
Participant (or, after a Participant's death, his or her
Beneficiary) may elect, at any time, to withdraw part or all
of his or her Account Balance, calculated as if there had
occurred a Termination of Employment as of the day of the
election, less a withdrawal penalty equal to 10% of such
amount (the net amount shall be referred to as the
"Withdrawal Amount"). This election can be made at any time,
before or after Retirement, Disability, death or Termination
of Employment, and whether or not the Participant (or
Beneficiary) is in the process of being paid pursuant to an
installment payment schedule. If made before Retirement,
Disability or death, a Participant's Withdrawal Amount shall
be calculated based on his or her Account Balance as if
there had occurred a Termination of Employment as of the day
of the election. Any partial withdrawal must be at least
equal to $25,000, or such higher amount as the Committee may
establish from time to time. The Participant (or his or her
Beneficiary) shall make this election by giving the
Committee advance written notice of the election in a form
determined from time to time by the Committee. The
Participant (or his or her Beneficiary) shall be paid the
Withdrawal Amount within 90 days of his or her election.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement
Benefit, his or her Account Balance.
5.2 Payment of Retirement Benefit. A Participant, in
connection with his or her commencement of participation in
the Plan, shall elect on an Election Form to receive the
Retirement Benefit in a lump sum or pursuant to An Annual
Installment Method. The Participant may annually change his
or her election to an allowable alternative payout period by
submitting a new Election Form to the Committee, provided
that any such Election Form is submitted at least 1 year
prior to the Participant's Retirement and is accepted by the
Committee in its sole discretion. The Election Form most
recently accepted by the Committee shall govern the payout
of the Retirement Benefit. If a Participant does not make
any election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum.
The lump sum payment shall be made, or installment payments
shall commence, no later than 90 days after the last day of
the Plan Year in which the Participant Retires. Any payment
made shall be subject to the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a
Participant dies after Retirement but before the Retirement
Benefit is paid in full, the Participant's unpaid Retirement
Benefit payments shall continue and shall be paid to the
Participant's Beneficiary (a) over the remaining number of
years and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived,
or (b) in a lump sum, if requested by the Beneficiary and
allowed in the sole discretion of the Committee, that is
equal to the Participant's unpaid remaining Account Balance.
5.4 Special "Make Whole" Benefits.
(a) "Make Whole" Pension Benefit With Respect to Deferrals
of Base Annual Salary. Base Annual Salary which is
deferred pursuant to this Plan cannot be included in
the compensation base for calculating retirement income
under the qualified defined benefit pension plans of
the Company and its affiliates (the "Pension Plans").
Therefore, a "make whole" benefit will be paid from
this Plan as a pension supplement to or with respect to
a Participant whose deferrals of Base Annual Salary
result in a lesser pension payment under the Pension
Plans. Such pension supplement shall equal the amount
by which such Participant's pension under the Pension
Plans (calculated for this purpose without regard to
any limitation or benefits imposed by Section 415 of
the Code, or any limitation on annual compensation
imposed by
Section 40 1 (a)(l 7) of the Code; hereinafter, the
"IRS Limitations") was less because deferrals of Base
Annual Salary under this Plan were not taken into
account in the calculation of such participant's
pension (but the amount of any supplemental pension
benefit "A" applicable to the Participant under the
Company's SERP shall be taken into account to avoid any
duplication of the pension supplement provided
hereunder). This section applies to all forms of
pension payable under the Pension Plans, including
pre-retirement death benefits.
(b) "Make Whole" Pension Benefit With Regard to Performance
and Incentive Awards. Performance awards under the
Company Short-Term Performance Plan and incentive
awards made under a former incentive plan of the
Company known as the Executive Incentive Compensation
Plan are excluded from the compensation base under the
Retirement Account Plan, a tax qualified defined
benefit plan of Wisconsin Electric Power Company (the
"Retirement Account Plan"). Similarly, special awards
made from time to time as determined by the Board are
likewise excluded. A "make whole" pension supplement
was provided for under the terms of Article IX(2) of
the prior Wisconsin Energy Corporation Executive
Deferred Compensation Plan as amended and restated as
of January 1, 1994 (the "Prior Company Plan") for any
Participant in that plan whose pension benefit under
the Retirement Account Plan would have been greater had
such performance awards, incentive awards or special
awards been included in the compensation base of the
Retirement Account Plan, calculated without regard to
the IRS limitations. As with Section 5.4(a) above,
supplemental pension benefit "A" shall be considered in
order to avoid duplication. It is the intent of this
Section to continue to provide such "make whole"
pension supplement and the provisions of such Article
IX(2) of the Prior Company Plan are incorporated by
reference and continue to apply hereunder, except as
modified by other provisions of this Section 5.4.
(c) "Make Whole" Long-Term Disability Benefit. It is the
intent of this Plan that a Participant not suffer any
loss with respect to a disability benefit under the
disability benefit applicable to employees of the
Company and its affiliates, if the Participant is
eligible for and participating in the long-term
disability benefit plan of an Employer (the "LTD" Plan)
because of either the exclusion of Base Annual Salary
deferred under this Plan from the compensation base
under the LTD Plan (the "Salary Deferral Limit") or the
special limitation on annual compensation which can be
taken into account under the LTD Plan imposed by
Section 505(b)(7) of the Code (the "IRS Special
Limit"). Therefore, in the event such a Participant
becomes eligible for and begins to receive a disability
benefit from the LTD Plan and the amount of such
disability benefit is limited because of the
application of the Salary Deferral Limit or the IRS
Special Limit, a "make whole" disability benefit shall
be paid from this Plan as a supplement to the
disability limit paid from the LTD Plan. Such LTD
supplement shall equal the monthly amount by which such
Participant's disability benefit under the LTD Plan was
less because of the application of the Salary Deferral
Limit and the IRS Special Limit. Such LTD supplement
shall commence at the same time as the disability
benefit paid under the LTD Plan and continue for so
long as such disability benefit is paid. Such LTD
supplement shall be paid out of general corporate
assets or out of a grantor trust, but not out of any
voluntary employees' beneficiary association or trust
covered by Section 50 1 (c)(9) of the Code.
(d) Form of Payment and Deferral Option. The "make whole"
pension supplements provided for in this Section 5.4(a)
and (b) shall be payable in lump sum form at the same
time as the benefit becomes payable to or with respect
to the Participant under the relevant Pension Plan (as
to the Section 5.4(a) supplement) or under the
Retirement Account plan (as to the Section 5.4(b)
supplement). The terms and conditions of the relevant
Pension Plan or the Retirement Account Plan shall
provide the governing principles as to the calculation
of the pension supplements arising under this Section
5.4. Notwithstanding the above, a Participant who
becomes entitled to a pension supplement pursuant to
Section 5.4(a) or (b) will be allowed to elect that the
relevant lump sum payment be determined and then
credited to such Participant's Account Balance under
this Plan as of the date the same would have otherwise
been paid (the "Supplement Payment Date") (with such
Participant to be treated as having then "Retired" for
purposes of this Plan, so that the Participant's
election for a method of payout under Article 5 shall
govern), provided that such an Election Form filed by
the Participant with regard to such pension
supplement(s) is submitted to the Committee at least
one year prior to the Supplemental Payment Date.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, the Participant's Beneficiary shall receive a
Pre-Retirement Survivor Benefit equal to the Participant's
Account Balance if the Participant dies before he or she
Retires, experiences a Termination of Employment or suffers
a Disability.
6.2 Payment of Pre-Retirement Survivor Benefit. A Participant,
in connection with his or her commencement of participation
in the Plan, shall elect on an Election Form whether the
Pre-Retirement Survivor Benefit shall be received by his or
her Beneficiary in a lump sum or pursuant to an Annual
Installment Method. The Participant may annually change this
election to an allowable alternative payout period by
submitting a new Election Form to the Committee, which form
is accepted by the Committee in its sole discretion. The
Election Form most recently accepted by the Committee prior
to the Participant's death shall govern the payout of the
Participant's Pre-Retirement Survivor Benefit. If a
Participant does not make any election with respect to the
payment of the Pre-Retirement Survivor Benefit, then such
benefit shall be paid in a lump sum. Despite the foregoing,
if the Participant's Account Balance at the time of his or
her death is less than $25,000, payment of the
Pre-Retirement Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum. The lump sum
payment shall be made, or installment payments shall
commence, no later than 90 days after the last day of the
Plan Year in which the Committee is provided with proof that
is satisfactory to the Committee of the Participant's death.
Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation,
the Participant shall receive a Termination Benefit, which
shall be equal to the Participant's Account Balance if a
Participant experiences a Termination of Employment prior to
his or her Retirement, death or Disability.
7.2 Payment of Termination Benefit. A Participant, in
connection with his or her participation in the Plan, shall
elect on an Election Form to receive the Termination Benefit
in a lump sum or over a period of 5 years in annual
installments using the Fractional Method specified in
Section 1.6. The Participant may annually change his or her
election to an allowable alternative by submitting a new
Election Form to the Committee, provided that any such
Election Form is submitted at least one year prior to the
Participant's Termination of Employment and is accepted by
the Committee in its sole discretion. However,
notwithstanding a Participant's election, if the
Participant's Account Balance at the time of his or her
Termination of Employment is less than $25,000, payment of
his or her Termination Benefit shall be paid in a lump sum.
The lump sum payment shall be made, or installment payments
shall commence, no later than 90 days after the last day of
the Plan Year in which the Participant experiences the
Termination of Employment. Any payment made shall be subject
to the Deduction Limitation.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver.
(a) Waiver of Deferral. A Participant who is determined by
the Committee to be suffering from a Disability shall
be (i) excused from fulfilling that portion of the
Annual Deferral Amount commitment that would otherwise
have been withheld from a Participant's Base Annual
Salary, Annual or Long-Term Performance Award,
Severance Payments and/or SERP Payments for the Plan
Year during which the Participant first suffers a
Disability and (11) excused from fulfilling any
existing unvested Restricted Stock Amount or
unexercised Stock Option Amount commitments. During the
period of Disability, the Participant shall not be
allowed to make any additional deferral elections, but
will continue to be considered a Participant for all
other purposes of this Plan.
(b) Return to Work. If a Participant returns to employment
after a Disability ceases, the Participant may elect to
defer an Annual Deferral Amount, Stock Option Amount
and Restricted Stock Amount for the Plan Year following
his or her return to employment or service and for
every Plan Year thereafter while a Participant in the
Plan; provided such deferral elections are otherwise
allowed and an Election Form is delivered to and
accepted by the Committee for each such election in
accordance with Section 3.2 above.
8.2 Continued Eligibility; Disability Benefit. A Participant
suffering a Disability shall, for benefit purposes under th
is Plan, continue to be considered to be employed and shall
be eligible for the benefits provided for in Articles 4, 5,
6 or 7 in accordance with the provisions of those Articles.
Notwithstanding the above, the Committee shall have the
right to, in its sole and absolute discretion and for
purposes of this Plan only, to deem the Participant to have
experienced a Termination of Employment at any time.
Further, in the case of a Participant who is otherwise
eligible to Retire, the Committee shall treat such
Participant as having Retired as soon as practicable
after such Participant is determined to be suffering a
Disability. In either case the Participant shall receive a
Disability Benefit equal to his or her Account Balance at
the time of the Committee's determination; provided,
however, that should the Participant otherwise have been
eligible to Retire, he or she shall be paid in accordance
with Article 5. If the Disability Benefit is not payable in
accordance with Article 5, it shall be paid in a lump sum
within 90 days of the Committee's exercise of such right.
Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any
time, to designate his or her Beneficiary(ies) (both primary
as well as contingent) to receive any benefits payable under
the Plan to a beneficiary upon the death of a Participant.
The Beneficiary designated under this Plan may be the same
as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant
participates.
9.2 Beneficiary Designation; Change. A Participant shall
designate his or her Beneficiary by completing and signing
the Beneficiary Designation Form, and returning it to the
Committee or its designated agent. A Participant shall have
the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary
Designation Form and the Committee's rules and procedures,
as in effect from time to time. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled.
The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and
accepted by the Committee prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and
acknowledged in writing by the Committee or its designated
agent.
9.4 No Beneficiary Designation . If a Participant fails to
designate a Beneficiary as provided in Sections 9.1, 9.2 and
9.3 above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving
spouse. If the Participant has no surviving spouse, but was
survived by a designated Beneficiary who was receiving or
was entitled to receive distribution but died prior to a
complete distribution of the Participant's benefits, the
benefits remaining shall be payable to such designated
Beneficiary's estate. If the Participant leaves no surviving
spouse and was not survived by a designated Beneficiary as
provided in the foregoing sentence, the benefits remaining
shall be payable to the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as
to the proper Beneficiary to receive payments pursuant to
this Plan, the Committee shall have the right, exercisable
in its discretion, to cause the Participant's Employer to
withhold such payments until this matter is resolved to the
Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge
all Employers and the Committee from all further obligations
under this Plan with respect to the Participant, and that
Participant's Election Form(s) shall terminate upon such
full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take a paid
leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the
Employer and the Annual Deferral Amount shall continue to be
withheld during such paid leave of absence in accordance
with Section 3.2.
10.2 Unpaid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take an unpaid
leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the
Employer and the Participant shall be excused from making
deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment
status. Upon such expiration or return, deferrals shall
resume for the remaining portion of the Plan Year in which
the expiration or return occurs, based on the deferral
election, if any, made for that Plan Year. If no election
was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Although each Employer anticipates that it
will continue the Plan for an indefinite period of time,
there is no guarantee that any Employer will continue the
Plan or will not terminate the Plan at any time in the
future. Accordingly, each Employer reserves the right to
discontinue its sponsorship of the Plan and/or to terminate
the Plan at any time with respect to all of its
participating Employees, by action of its Board of Directors
or Compensation Committee. Upon the termination of the Plan
with respect to any Employer, the Election Form(s) of the
affected Participants who are employed by that Employer
shall terminate. The terminating Employer may decide that
the Account Balances of its participating Employees shall
continue to be held under the provisions of this Plan (but
with no further deferrals to be made after termination of
the Plan by such Employer as to its participating Employees)
until an event occurs which would otherwise cause a payout
to be made hereunder. Any Company Contribution amounts which
are not fully vested may continue to be so held under the
Plan, even if other amounts in the Account Balances are not
so held. Alternatively, the Employer may determine to
proceed with distribution of Account Balances of the
affected Participants determined as if they had experienced
a Termination of Employment on the date of Plan termination
or, if Plan termination occurs after the date upon
which a Participant was eligible to Retire, then with
respect to that Participant as if he or she had Retired on
the date of Plan termination. However, if an Employer
terminates the Plan as to its participating Employees after
a Change in Control, the Employer shall be required to pay
such benefits in a lump sum, except as otherwise provided in
Section 15.18. The termination of the Plan shall not
adversely affect any Participant or Beneficiary who has
become entitled to the payment of any benefits under the
Plan as of the date of termination; provided however, that
the Employer shall have the right to accelerate installment
payments without a premium or prepayment penalty by paying
the Account Balance in a lump sum or using fewer years
(provided that the present value of all payments that will
have been received by a Participant at any given point of
time under the different payment schedule shall equal or
exceed the present value of all payments that would have
been received at that point in time under the original
payment schedule).
11.2 Amendment. The Company has the sole right to amend or
modify the Plan and may do so at any time, in whole or in
part, by the action of its Board of Directors or
Compensation Committee; provided, however, that: (i) no
amendment shall be effective to decrease the value of a
Participant's Account Balance in existence at the time the
amendment or modification is made, and (ii) no amendment
shall adversely affect any Participant or Beneficiary who
has become entitled to benefits as of the date of the
amendment. Further, during the pendency of a Potential
Change in Control (as defined below) and at all times
following a Change in Control, no amendment or modification
may be made which in any way adversely affects the interests
of any Participant with respect to amounts credited to such
Participant's Account Balance as of the date of the
amendment. A "Potential Change in Control" shall be deemed
to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(a) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in
Control;
(b) the Company or any Person publicly announces an
intention to take or to consider taking actions which,
if consummated, would constitute a Change in Control;
(c) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing
15% or more of either the then outstanding shares of
common stock of the Company or the combined voting
power of the Company's then outstanding securities (not
including in the securities beneficially owned by such
Person any securities acquired directly from the
Company or its affiliates); or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in
Control has occurred.
The capitalized terms in the above definition have the same
meaning as in the "Change in Control" definition set forth
in Section 1.13 of the Plan.
11.3 Effect of Payment. The full payment of the applicable
benefit under any provision of the Plan shall completely
discharge all obligations to a Participant and his or her
designated Beneficiaries under this Plan and the
Participant's Election Form(s) shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. Except as otherwise provided in this
Article 12, this Plan shall be administered by the
Committee. Members of the Committee may be Participants
under this Plan. The Committee (or the Chief Executive
Officer if such individual chooses to so act) shall also
have full and complete discretionary authority to (1) make,
amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and (ii)
decide or resolve any and all questions including
interpretations of this Plan, as may anise in connection
with the claims procedures set forth in Article 13 or
otherwise with regard to the Plan. Any individual serving on
the Committee who is a Participant shall not vote or act on
any matter relating solely to himself or herself. The Chief
Executive Officer may not act on any matter involving such
officer's own participation in the Plan. All references to
the Committee shall be deemed to include reference to the
Chief Executive Officer. When making a determination or
calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Company.
Notwithstanding any other provision of this Plan, the
Committee shall have the power, in its sole and absolute
discretion, to grant or deny a request from any Participant,
Inactive Participant or Beneficiary for acceleration in
payment of any Account Balance held with respect to such
person. This discretionary power shall reside with the
Committee under this Section 12.1 and with Administrator
under Section 12.2.
12.2 Administration Upon Change In Control. For purposes of this
Plan, the Company shall be the "Administrator" at all times
prior to the occurrence of a Change in Control. Upon and
after the occurrence of a Change in Control, the
"Administrator" shall be an independent third party selected
by the individual who, at any time prior to such event, was
the Company's Chief Executive Officer or, if there is no
such officer or such officer does not act, by the Company's
then highest ranking officer (the "Appointing Officer").
Upon the occurrence of a Change in Control, the
Administrator shall have full and complete discretionary
power to determine all questions arising in connection with
the administration of the Plan and the interpretation of the
Plan and Trust including, but not limited to benefit
entitlement determinations. Upon and after the occurrence of
a Change in Control, the Company must: (1) pay all
reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any
costs, expenses and liabilities (including, without
limitation, attorney's fees) of whatsoever kind and nature
which may be imposed on, asserted against or incurred by the
Administrator in connection with the performance of the
Administrator hereunder, except with respect to matters
resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply
full and timely information to the Administrator or all
matters relating to the Plan, the Trust, the Participants
and their Beneficiaries, the Account Balances of the
Participants, including the dates of Retirement, Disability,
death or Termination of Employment of the Participants, and
such other pertinent information as the Administrator may
reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement
appointed) only by either individual who was or could have
been an Appointing Officer. Upon and after a Change in
Control, the Administrator may not be terminated by the
Company.
12.3 Agents. In the administration of this Plan, the Committee
may, from time to time, employ agents and delegate to them
such administrative duties as it sees fit (including acting
through
a duly appointed representative) and may from time to time
consult with counsel who may be counsel to any Employer.
12.4 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or
in connection with the administration, interpretation and
application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.5 Indemnity of Committee. All Employers shall indemnify and
hold harmless the members of the Committee, and any other
Employee to whom the duties of the Committee may be
delegated, and the Administrator against any and all claims,
losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Plan, except
in the case of willful misconduct by the Committee, any of
its members, any such Employee or the Administrator.
12.6 Employer Information. To enable the Committee and/or
Administrator to perform its functions, the Company and each
Employer shall supply full and timely information to the
Committee and/or Administrator, as the case may be, on all
matters relating to the compensation of its Participants,
the dates of the Retirement, Disability, death or
Termination of Employment of its Participants, and such
other pertinent information as the Committee or
Administrator may reasonably require.
12.7 Coordination with Other Benefits. The benefits provided for
a Participant and Participant's Beneficiary under the Plan
are in addition to any other benefits available to such
Participant under any other plan or program for employees of
the Participant's Employer. The Plan shall supplement and
shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being
referred to below as a "Claimant") may deliver to the
Committee a written claim for a determination with respect
to the amounts distributable to such Claimant from the Plan.
If such a claim relates to the contents of a notice received
by the Claimant, the claim must be made within 90 days after
such notice was received by the Claimant. All other claims
must be made within 180 days of the date on which the event
that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the
Claimant.
13.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify
the Claimant in writing:
(a) that the Claimant's requested determination has been
made, and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary,
in whole or in part, to the Claimant's requested
determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the
claim, or any part of it;
(ii) specific reference(s) to pertinent provisions of
the Plan upon which such denial was based;
(iii)a description of any additional material or
information necessary for the Claimant to perfect
the claim, and an explanation of why such material
or information is necessary; and
(iv) an explanation of the claim review procedure set
forth in Section 13.3 below.
13.3 Review of a Denied Claim. A Claimant is entitled to request
a review of any claim that has been denied in whole or in
part. However, in order to obtain such review, the Claimant
must submit a written request for review with the Committee
within 60 days after receiving a notice from the Committee
that a claim has been denied, in whole or in part. Absent
receipt by the Committee of a written request for review
within such 60-day period, the claim will be deemed to be
conclusively denied. After the timely filing of a request
for review, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
13.4 Decision on Review. The Committee shall render its decision
on review promptly, and not later than 60 days after the
filing of a written request for review of the denial, unless
a hearing is held or other special circumstances require
additional time, in which case the Committee's decision must
be rendered within 120 days after such date. Such decision
must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions
upon which the decision was based; and
(c) such other matters as the Committee deems relevant.
13.5 Legal Action. Any final decision by the Committee shall be
binding on all parties. A Claimant's compliance with the
foregoing provisions of this Article 13 is a mandatory
prerequisite to a Claimant's right to commence any legal
action with respect to any claim for benefits under this
Plan. If a final determination of the Committee is
challenged in court,
such determination shall not be subject to de novo review
and shall not be overturned unless proven to be arbitrary
and capricious based on the evidence considered by the
Committee at the time of such determination.
ARTICLE 14
Trust
14.1 Establishment of the Trust. The Company shall establish the
Trust, and each Employer shall at least annually transfer
over to the Trust such assets as the Employer determines, in
its sole discretion, are necessary to provide, on a present
value basis, for its respective future liabilities created
with respect to the Annual Deferral Amounts, Annual Company
Contribution Amounts, Company Matching Amounts, Annual Stock
Option Amounts and Annual Restricted Stock Amounts for such
Employer's Participants for all periods prior to the
transfer, as well as any debits and credits to the
Participants' Account Balances for all periods prior to the
transfer, taking into consideration the value of the assets
in the trust at the time of the transfer.
14.2 Interrelationship of the Plan and the Trust. The provisions
of the Plan shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions
of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the
assets transferred to the Trust. Each Employer shall at all
times remain liable to carry out its obligations under the
Plan.
14.3 Distributions From the Trust. Each Employer's obligations
under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employees obligations under
this Plan.
ARTICLE 15
Miscellaneous
15.1 Status of Plan. The Plan is intended to be a plan that is
not qualified within the meaning of Code Section 401 (a) and
that "is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a
select group of management or highly compensated employees"
within the meaning of ERISA. The Plan shall be administered
and interpreted to the extent possible in a manner
consistent with that intent.
15.2 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, interests or claims in any
property or assets of an Employer. For purposes of the
payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. An Employer's
obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
15.3 Employer's Liability. An Employer's liability for the
payment of benefits shall be defined only by the Plan and
any Election Form(s), as entered into between the Employer
and a Participant. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided in
the Plan.
15.4 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate, alienate or convey in
advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to
which are expressly declared to be, unassignable and
non-transferable to the maximum extent allowed by law. No
part of the amounts payable shall, prior to actual payment,
be subject to seizure, attachment, garnishment or
sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any
other person, nor shall any part of the same, to the maximum
extent allowed by law, be transferable by operation of law
in the event of a Participant's or any other person's
bankruptcy or insolvency or be transferable to a spouse as a
result of a property settlement or otherwise.
15.5 Not a Contract of Employment. The terms and conditions of
this Plan shall not be deemed to constitute a contract of
employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an "at will"
employment relationship that can be terminated at any time
for any reason, or no reason, with or without cause, and
with or without notice, unless expressly provided in a
written employment agreement. Nothing in this Plan shall be
deemed to give a Participant the right to be retained in the
service of any Employer as an Employee, or to interfere with
the right of any Employer to discipline or discharge the
Participant at any time.
15.6 Furnishing Information. A Participant or his or her
Beneficiary will cooperate with the Committee by furnishing
any and all information requested by the Committee and take
such other actions as may be requested in order to
facilitate the administration of the Plan and the payments
of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem
necessary.
15.7 Terms. Whenever any words are used herein in the masculine,
they shall be construed as though they were in the feminine
in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they
shall be construed as though they were used in the plural or
the singular, as the case may be, in all cases where they
would so apply
15.8 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and shall
not control or affect the meaning or construction of any of
its provisions.
15.9 Governing Law. Subject to ERISA, the provisions of this
Plan shall be construed and interpreted according to the
internal laws of the State of Wisconsin without regard to
its conflicts of laws principles.
15.10 Notice. Any notice or filing required or permitted to
be given to the Committee under this Plan shall be
sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:
Corporate Secretary
Wisconsin Energy Corporation
231 W. Michigan Street
Milwaukee, Wisconsin 53203
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in
writing and hand-delivered, or sent by mail, to the last
known address of the Participant.
15.11 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Participant's Employer and its
successors and assigns and the Participant and the
Participant's designated Beneficiaries.
15.12 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.
15.13 Incompetent. If the Committee determines in its
discretion that a benefit under this Plan is to be paid to a
minor, a person declared incompetent or to a person
incapable of handling the disposition of that person's
property, the Committee may direct payment of such benefit
to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the
case may be, and shall be a complete discharge of any
liability under the Plan for such payment amount.
15.14 Court Order. The Committee is authorized to make any
payments directed by court order in any action in which the
Plan or the Committee has been named as a party. In
addition, if a court determines that a spouse or former
spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property
settlement or otherwise, the Committee in its sole
discretion, shall have the right, notwithstanding any
election made by a Participant, to immediately distribute
the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or
former spouse.
15.15 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a
Participant's benefits under this
Plan becomes taxable to the Participant prior to
receipt, a Participant may petition the
Committee before a Change in Control, or the third
party administrator after a
Change in Control, for a distribution of that portion
of his or her benefit that has
become taxable. Upon the grant of such a petition,
which grant shall not be
unreasonably withheld (and, after a Change in Control,
shall be granted), a
Participant's Employer shall distribute to the
Participant immediately available funds
in an amount equal to the taxable portion of his or her
benefit (which amount shall
not exceed a Participant's unpaid Account Balance under
the Plan). If the petition is
granted, the tax liability distribution shall be made
within 90 days of the date when
the Participant's petition is granted. Such a
distribution shall affect and reduce the
benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with its
terms and benefits are distributed from the Trust to a
Participant in accordance therewith, the Participant's
benefits under this Plan shall be reduced to the extent
of such distributions.
15.16 Insurance. The Employers, on their own behalf or on
behalf of the trustee of the Trust, and, in their sole
discretion, may apply for and procure insurance on the life
of the Participant, in such amounts and in such forms as the
Trust may choose. The Employers or the trustee of the Trust,
as the case may be, shall be the sole owner and beneficiary
of any such insurance. The Participant shall have no
interest whatsoever in any such policy or policies, and at
the request of the Employers shall submit to medical
examinations and supply such information and execute such
documents as may be required by the insurance company or
companies to whom the Employers have applied for insurance.
The Participant may elect not to be insured.
15.17 Legal Fees To Enforce Rights After Change in Control.
The Company and each Employer is aware that upon the
occurrence of a Change in Control, the Company Board or the
board of directors of a Participant's Employer (which might
then be composed of new members) or a shareholder of the
Company or the Participant's Employer, or of any successor
corporation might then cause or attempt to cause the
Company, the Participant's Employer or such successor to
refuse to comply with its obligations under the Plan and
might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute,
litigation seeking to deny Participants the benefits
intended under the Plan. In these circumstances, the purpose
of the Plan could be frustrated. Accordingly, if, following
a Change in Control, it should appear to any Participant
that the Company, the Participant's Employer or any
successor corporation has failed to comply with any of its
obligations under the Plan or any agreement thereunder or,
if the Company, such Employer or any other person takes any
action to declare the Plan void or unenforceable or
institutes any litigation or other legal action designed to
deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the
Participant's Employer irrevocably authorize such
Participant to retain counsel of his or her choice at the
expense of the Company and the Participant's Employer (who
shall be jointly and severally liable for all reasonable
fees of such counsel) to represent such Participant in
connection with the initiation or defense of any litigation
or other legal action, whether by or against the Company,
the Participant's Employer or any director, officer,
shareholder or other person affiliated with the Company, the
Participant's Employer or any successor thereto in any
jurisdiction.
15.18 Payout Under Special Circumstances. Notwithstanding
any other provision of this Plan, upon the happening of
either of the following events, the Account Balances of all
Participants, Inactive Participants and Beneficiaries shall
be forthwith paid in a single lump sum, except in the case
of an event constituting a Change in Control for any
individual who has previously filed a special written
irrevocable deferral election form under the SERP, or under
a special written contract with the Company (including,
without limitation, the senior officer change in control,
severance and non-compete agreements currently in effect)
electing not to receive such an immediate lump sum but to
instead be paid on another basis:
(a) the occurrence of a Change in Control; or
(b) should at any time Moody's or Standard & Poor's
investment rating services classify the senior debt
obligations of the Company as less than "investment
grade" (which
term shall mean bonds of the Company which are assigned
to the top four grades, which as of the date of this
document are AAA, AA, A and BBB by Standard & Poor's
and Aaa, Aa2 and Baa2 by Moody's.