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 as of April 29, 2003
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
3.12 Crediting/Debiting of Account Balances
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 as of April 29, 2003)
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 for purposes of determining the amount of the
installment payment to be made, the Account Balance of the
Participant shall be valued as of the close of business on the
last business day of the year preceding the year for which the
payment is to be made. Each annual installment, regardless of
the method selected, shall be payable within 60 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 deferred
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 (?) 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 13d-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 1 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 take any or all of the following actions:
(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 SERP Payments and/or Make Whole Pension
Supplements. 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, SERP
Payments and/or Make Whole Pension Supplements (as referenced in
Section 5.4(d)) 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%
Make Whole Pension Supplements 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) Make Whole Pension Supplements. Section 5.4(d) provides the
rules applicable to Election Forms regarding Make Whole Pension
Supplements.
(f) 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.
(g) 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, unless the Employer in its
sole discretion determines otherwise. 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,
any Annual Company Contribution Amount previously credited for
that Plan Year shall be forfeited and become 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 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
280G 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, unless changed in accordance with the next
sentence. Subject to Section 3.12(f) and (g) below, commencing
with the Participant's commencement of participation in the Plan
and continuing thereafter, 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
additional shares 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
periodic basis based on the performance of each Measurement Fund
selected by the Participant, as determined by the Committee in
its sole discretion. 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 in 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% withdrawal 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. All
lump sum payments and final payments of the remaining balance of
any Account Balance shall be calculated based upon the value of
the Account Balance determined (unless and until the Company
chooses another ending valuation date) as of the last business
day of the calendar year quarter immediately preceding the date
of payment (the "Ending Valuation Date"). All rights on the part
of a Participant or any other person to elect or change the
Measurement Funds under Section 3.12 shall be deemed to have
ceased as of such Ending Valuation Date and no adjustment in the
value of an Account Balance shall be considered for any purpose
under the Plan after such Ending Valuation Date.
ARTICLE 4
In Service Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 In Service Payout. In connection with and at the time of
each election to defer an Annual Deferral Amount, a Participant
may irrevocably elect, on a prospective basis only, 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 with respect to an
Annual Performance Award relating to services in 2002 that would
otherwise be payable in 2003 but is actually deferred in 2003,
the two year In Service Payout would become payable during a 90
day period commencing January 1, 2006.
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. Any
change to an alternative payout is also subject to the rules in
Section 3.12(g)(iii). 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 401(a)(17) 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
501(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. Any change to an
alternative payout is also subject to the rules in Section
3.12(g)(iii). 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 (ii)
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 this
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, Compensation Committee
or the Committee referred to in Article 12 below; 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 (i) 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
arise 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 on
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 Employer's 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
senior debt obligations 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, Aa, A and Baa by
Moody's.