Exhibit 10.2
WISCONSIN ENERGY CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
PLAN DOCUMENT
Amended and Restated as of July 1, 2002 and
As Further Amended as of April 29, 2003
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
ARTICLE 2 ELECTION FORM FOR DEFERRAL OF DIRECTOR FEES
2.1 Deferral of Fees
2.2 Termination of Deferral of Fees
ARTICLE 3 DEFERRAL COMMITMENTS/CREDITING/TAXES
3.1 Stock Option Deferral
3.2 Withholding of Fee Deferral Amounts
3.3 Stock Option Amount
3.4 Account Balances of Inactive Participants and
other Participants as of July 1, 2002.
3.5 Investment of Trust Assets
3.6 Sources of Stock
3.7 Vesting
3.8 Crediting/Debiting of Account Balances
3.9 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
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT
6.1 Pre-Retirement Survivor Benefit
6.2 Payment of Pre-Retirement Survivor Benefit
ARTICLE 7 BENEFICIARY DESIGNATION
7.1 Beneficiary
7.2 Beneficiary Designation; Change
7.3 Acknowledgment
7.4 No Beneficiary Designation
7.5 Doubt as to Beneficiary
7.6 Discharge of Obligations
ARTICLE 8 TERMINATION, AMENDMENT OR MODIFICATION
8.1 Termination
8.2 Amendment
8.3 Effect of Payment
ARTICLE 9 ADMINISTRATION
9.1 Committee Duties
9.2 Administration Upon Change In Control
9.3 Agents
9.4 Binding Effect of Decisions
9.5 Indemnity of Committee
9.6 Company and Participating Subsidiary Information
9.7 Coordination with Other Benefits
ARTICLE 10 CLAIMS PROCEDURES
10.1 Presentation of Claim
10.2 Notification of Decision
10.3 Review of a Denied Claim
10.4 Decision on Review
10.5 Legal Action
ARTICLE 11 TRUST
11.1 Establishment of the Trust
11.2 Interrelationship of the Plan and the Trust
11.3 Distributions From the Trust
ARTICLE 12 MISCELLANEOUS
12.1 Unsecured General Creditor
12.2 Liability
12.3 Nonassignability
12.4 Furnishing Information
12.5 Terms
12.6 Captions
12.7 Governing Law
12.8 Notice
12.9 Successors
12.10 Validity
12.11 Incompetent
12.12 Court Order
12.13 Distribution in the Event of Taxation
12.14 Insurance
12.15 Legal Fees To Enforce Rights After Change in Control
12.16 Payout Under Special Circumstances
WISCONSIN ENERGY CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
(As Amended and Restated as of July 1, 2002 and
as Further Amended as of April 29, 2003)
Purpose
The purpose of the Wisconsin Energy Corporation Directors'
Deferred Compensation Plan (the "Plan") is to establish a method
of paying directors' compensation which will aid Wisconsin Energy
Corporation and its subsidiaries in attracting and retaining as
members of their Boards of Directors persons whose abilities,
experience and judgment can contribute to the continued progress
of the Company and its subsidiaries. The Plan is hereby amended
and restated effective as of May 1, 2003.
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 Company equal to the sum of
(i) the Deferral Account balance and (ii) the Stock Option
Account balance. The 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 "Deferral Amount" shall mean that portion of a Participant's
fees for services as a Director a Participant elects to have, and
is deferred, in accordance with Article 2.
1.3 "Annual Installment Method" shall be an annual installment
payment over the number of years selected by the Participant, not
to exceed 20, in accordance with this Plan, as set forth below.
In each case, the Account Balance of the Participant shall be
calculated as of the close of business on the last business day
of the year. Each annual installment, regardless of the method
selected, shall be payable within 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.
1.4 "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 3.1 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.
1.5 "Beneficiary" shall mean one or more persons, trusts,
estates or other entities, designated in accordance with
Article 7, that are entitled to receive benefits under this Plan
upon the death of a Participant.
1.6 "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.
1.7 "Board" shall mean the board of directors of the Company and
the Board of any subsidiary of the Company that the Company has
authorized to participate in the plan.
1.8 "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.
1.9 "Chairman" shall mean the Chairman of the Board of the
Company.
1.10 "Claimant" shall have the meaning set forth in Section 10.1.
1.11 "Committee" shall mean an internal administrative committee
appointed by the Chairman to administer the Plan described in
Article 9.
1.12 "Company" shall mean Wisconsin Energy Corporation, a
Wisconsin corporation, and any successor to all or substantially
all of the Company's assets or business
1.13 "Deferral Account" shall mean (i) the sum of all of a
Participant's 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.
1.14 "Director" solely for purposes of this Plan shall mean any
director of the Company or a participating subsidiary who is not
also an officer or employee of the Company or any of its
subsidiaries. This plan is solely for "outside" Directors.
1.15 "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.
1.16 "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 Company
permitting a Participant under this Plan to defer gain with
respect to such option.
1.17 "In Service Payout" shall mean the payout set forth in
Section 4.1.
1.18 "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.
1.19 "Participant" shall mean any Director who chooses to
participate 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.
1.20 "Plan" shall mean the Company's Directors' Deferred
Compensation Plan.
1.21 "Plan Year" shall mean a period beginning on January 1 of
each calendar year and continuing through December 31 of such
calendar year.
1.22 "Pre-Retirement Survivor Benefit" shall mean the benefit set
forth in Article 6.
1.23 "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).
1.24 "Retirement", "Retire(s)" or "Retired" shall mean, with
respect to a Director and solely for the purposes of this Plan,
the date when the Director's service as a director for the
Company and all of the Company's subsidiaries has ceased for any
reason other than death.
1.25 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.26 "Stock" shall mean Wisconsin Energy Corporation common
stock.
1.27 "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.
1.28 "Stock Option Amount" shall mean, for any Eligible Stock
Option, the amount of Qualifying Gains deferred in accordance
with Section 3.1 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.
1.29 "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.
1.30 "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
Election Form for Deferral of Director Fees
2.1 Deferral of Fees. The annual fees payable to a Director for
any calendar year are currently payable in lump sum in January of
each calendar year. All or any portion of such fees may be
deferred, provided the Director elects to do so on an Election
Form filed with the Committee no later than December 31st of the
calendar year prior to the calendar year for which such annual
fees otherwise become payable. All or any portion of any
additional meeting or other fees for a Director's services which
have not yet been earned by the performance of such service may
be deferred by a Director on an Election Form filed with the
Committee, with any such Form to become effective on the first
day of the calendar month following receipt of the form.
2.2 Termination of Deferral of Fees. A Director may revoke or
change his or her election with request to deferral of fees by
timely delivering to the Committee in accordance with its rules
and procedures a new Election Form before the end of the month
preceding the month for which the election will be effective.
Notwithstanding any other provision of this Plan, any Election
Form or revocation will be given prospective effective only and
may not affect prior deferrals.
ARTICLE 3
Deferral Commitments/Crediting/Taxes
3.1 Stock Option Deferral.
(a) For each Eligible Stock Option, a Participant may elect to
defer as provided in (b) below, 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.
(b) 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.
3.2 Withholding of Fee Deferral Amounts. For each Plan Year,
the amount of fees deferred shall be withheld and credited to the
Participants Account Balance as of the date or dates the deferred
fees would otherwise have been payable.
3.3 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 Company 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.
3.4 Account Balances of Inactive Participants and other
Participants as of July 1, 2002. Notwithstanding any other
provisions of this Plan, the Account Balance of any Inactive
Participant (or beneficiary thereof) who is no longer a Director
as of July 1, 2002, and whose Account Balance is in pay status
under the terms of this Plan as it existed prior to July 1, 2002
(the "Prior Plan") shall continue to be administered and
distributed as provided under the terms of the 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
Director who was a participant in the Prior Plan and who
continues as a Director on or after July 1, 2002 will remain
subject to the distribution method elected under the Prior Plan
unless and until a new distribution method has been elected under
this Plan and become effective.
3.5 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.
3.6 Sources of Stock. If Stock is credited under the Plan in
the Trust in connection with an Eligible Stock Option exercise,
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.
3.7 Vesting. A Participant shall at all times be 100% vested in
his or her Deferral Account and Stock Option Account.
3.8 Crediting/Debiting of Account Balances. Subject to Section
3.8(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 3.8(f)
and (g) below, a Participant, in connection with his or her
initial deferral election in accordance with Section 3.2 above,
or in connection with the restatement of this Plan effective as
of July 1, 2002, shall elect, on the Election Form, one or more
Measurement Fund(s) (as described in Section 3.8(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 3.8(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 3.8(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 3.8(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 3.8(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 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.
(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. Notwithstanding any
provision of this Plan that may be construed to the contrary, the
Participant's Stock Option 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
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 July
1, 2002, different rules pertained with respect to amounts
allocated to the Company Stock Measurement Fund. Any amounts so
allocated could not be moved out of such Fund at any time prior
to distribution. Such restriction was dropped from the Plan
effective as of July 1, 2002. In order that any election by a
Participant who is a 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 by such a Participant may only be given
effect if it is approved by the Chairman (or if such change is
requested by the Chairman at any time when the Chairman is also a
Director participating in this Plan, such change may be given
effect only if it is approved by the Compensation Committee of
the Board, excluding the Chairman).
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.
3.9 Distributions. Any applicable tax withholding or reporting
requirements with regard to amounts verified under and paid from
this Plan shall be satisfied as determined by the Company in its
sole discretion. 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 3.8 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 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 a 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
Deferral Amount. 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 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
Retirement). Subject to 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 Deferral Amount is
actually deferred. By way of example, if a two year In Service
Payout is elected for Deferral Amounts that are deferred in the
Plan Year commencing January 1, 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, or 8, any
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) 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
Retirement 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. 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 Retirement 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 or death, 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, or
death, a Participant's Withdrawal Amount shall be calculated
based on his or her Account Balance as if there had occurred a
Retirement 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. 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, provided
that any such Election Form is submitted at least 1 year prior to
the Participant's Retirement. Any change to an alternative
payout is also subject to the rules in Section 3.8(iii). The
Election Form most recently accepted 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.
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.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. 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.
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.
ARTICLE 7
Beneficiary Designation
7.1 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 a Company in which the Participant participates.
7.2 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.
7.3 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.
7.4 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided in Sections 7.1, 7.2 and 7.3
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.
7.5 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 Company or the participating subsidiary
to withhold such payments until this matter is resolved to the
Committee's satisfaction.
7.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge the
Company and any participating subsidiary 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 8
Termination, Amendment or Modification
8.1 Termination. Although the Company anticipates that it will
continue the Plan for an indefinite period of time, there is no
guarantee that the Company will continue the Plan or will not
terminate the Plan at any time in the future. Accordingly, the
Company reserves the right to discontinue its sponsorship of the
Plan and/or to terminate the Plan at any time or to exclude any
participating subsidiary from further participation at any time,
by action of the Company's Board of Directors or Compensation
Committee. Upon the termination of the Plan by the Company or
exclusion of any participating subsidiary, the Election Form(s)
of the affected Participants shall terminate. The Company may
decide that the Account Balances of the affected participants
shall continue to be held under the provisions of this Plan (but
with no further deferrals to be made by the affected
Participants) until an event occurs which would otherwise cause a
payout to be made hereunder. Alternatively, the Company may
determine to proceed with distribution of Account Balances of the
affected Participants determined as if they had experienced a
Retirement 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 the Company terminates the Plan after a Change in Control, the
Company shall be required to pay such benefits in a lump sum,
except as otherwise provided in Section 12.16. 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 Company 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).
8.2 Amendment. The Company has the sole right to amend or
modify the Plan and may do so at any time, in whole or in part,
by the action of its Board of Directors or Compensation
Committee; provided, however, that: (i) no amendment shall be
effective to decrease the value of a Participant's Account
Balance in existence at the time the amendment or modification is
made, and (ii) no amendment shall adversely affect any
Participant or Beneficiary who has become entitled to benefits as
of the date of the amendment. Further, during the pendency of a
Potential Change in Control (as defined below) and at all times
following a Change in Control, no amendment or modification may
be made which in any way adversely affects the interests of any
Participant with respect to amounts credited to such
Participant's Account Balance as of the date of the amendment. A
"Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall
have occurred:
(a) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(b) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more
of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then
outstanding securities (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates); or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
The capitalized terms in the above definition have the same
meaning as in the "Change in Control" definition set forth
in Section 1.8 of the Plan.
8.3 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 9
Administration
9.1 Committee Duties. Except as otherwise provided in this
Article 9, this Plan shall be administered by the Committee.
Members of the Committee may be Participants under this Plan.
The Committee (or the Chairman, 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 10 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 Chairman may not act on any matter involving such
individual's own participation in the Plan. All references to
the Committee shall be deemed to include reference to the
Chairman. 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 9.1 and with Administrator under Section 9.2.
9.2 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 or death 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.
9.3 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 Company.
9.4 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.
9.5 Indemnity of Committee. The Company and each participating
subsidiary shall indemnify and hold harmless the members of the
Committee, and any other person who is an employee of the Company
or a participating subsidiary and 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.
9.6 Company and Participating Subsidiary Information. To enable
the Committee and/or Administrator to perform its functions, the
Company and each participating subsidiary 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 or death of its
Participants, and such other pertinent information as the
Committee or Administrator may reasonably require.
9.7 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 available to them. 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 10
Claims Procedures
10.1 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.
10.2 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 10.3 below.
10.3 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.
10.4 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.
10.5 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 10 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 11
Trust
11.1 Establishment of the Trust. The Company shall establish the
Trust, and the Company and each participating subsidiary shall at
least annually transfer over to the Trust such assets as the
Company determines, in its sole discretion, are necessary to
provide, on a present value basis, for their respective future
liabilities created with respect to the Deferral Amounts and
Annual Stock Option Amounts for all periods prior to the
transfer, taking into consideration the value of the assets in
the trust at the time of the transfer.
11.2 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 Company and any participating
subsidiary , Participants and the creditors of the Company and
each participating subsidiary to the assets transferred to the
Trust. The Company and each participating subsidiary shall at
all times remain liable to carry out their obligations under the
Plan.
11.3 Distributions From the Trust. The obligations of the
Company and each participating subsidiary under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce their
obligations under this Plan.
ARTICLE 12
Miscellaneous
12.1 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 the Company and each participating subsidiary. For
purposes of the payment of benefits under this Plan, any and all
of the assets of the Company and each participating subsidiary
shall be, and remain, the general, unpledged unrestricted assets
of each. The obligation of the Company and each participating
subsidiary under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.
12.2 Liability. The liability of the Company and each
participating subsidiary for the payment of benefits shall be
defined only by the Plan and any Election Form(s), as entered
into between the Company and a Participant. Neither the Company
nor any participating subsidiary shall have any obligation to a
Participant under the Plan except as expressly provided in the
Plan.
12.3 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.
12.4 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.
12.5 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.
12.6 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.
12.7 Governing Law. 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.
12.8 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.
12.9 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Company and each participating
subsidiary and their successors and assigns and the Participant
and the Participant's designated Beneficiaries.
12.10 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.
12.11 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.
12.12 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.
12.13 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), the Company and each participating subsidiary 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.
12.14 Insurance. The Company and any participating
subsidiary, 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 Company and each
participating subsidiary 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 Company or
a participating subsidiary 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
Company or any participating subsidiary has applied for
insurance. The Participant may elect not to be insured.
12.15 Legal Fees To Enforce Rights After Change in Control.
The Company and each participating subsidiary is aware that upon
the occurrence of a Change in Control, the Company Board or the
board of directors of a Participant's participating subsidiary
(which might then be composed of new members) or a shareholder of
the Company or any successor corporation might then cause or
attempt to cause the Company, a participating subsidiary or such
successor to refuse to comply with its obligations under the Plan
and might cause or attempt to cause the Company or a
participating subsidiary 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, a
participating subsidiary 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 a participating
subsidiary 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 such participating subsidiary irrevocably authorize
such Participant to retain counsel of his or her choice at the
expense of the Company and such participating subsidiary (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 participating
subsidiary or any director, officer, shareholder or other person
affiliated with the Company, the participating subsidiary or any
successor thereto in any jurisdiction.
12.16 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 with the
Company 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).