-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QwbZzgNhjjspnU3HuEPGIy9w2RBSJor4fAxi/NtoiJN2PgICmLrAo2PWx5KPZ4tG TEsabsghrPIZdyMUmh3wBw== 0000950131-99-001462.txt : 19990315 0000950131-99-001462.hdr.sgml : 19990315 ACCESSION NUMBER: 0000950131-99-001462 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WISCONSIN ENERGY CORP CENTRAL INDEX KEY: 0000783325 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 391391525 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-73137 FILM NUMBER: 99564313 BUSINESS ADDRESS: STREET 1: 231 W MICHIGAN ST STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 BUSINESS PHONE: 4142212345 MAIL ADDRESS: STREET 1: 231 WEST MICHIGAN STREET STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEC CAPITAL TRUST I CENTRAL INDEX KEY: 0001080779 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-73137-01 FILM NUMBER: 99564314 BUSINESS ADDRESS: STREET 1: 231 W MICHIGAN ST STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 BUSINESS PHONE: 4142212345 MAIL ADDRESS: STREET 1: 231 WEST MICHIGAN STREET STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEC CAPITAL TRUST II CENTRAL INDEX KEY: 0001080781 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-73137-02 FILM NUMBER: 99564315 BUSINESS ADDRESS: STREET 1: 231 W MICHIGAN ST STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 BUSINESS PHONE: 4142212345 MAIL ADDRESS: STREET 1: 231 WEST MICHIGAN STREET STREET 2: P O BOX 2949 CITY: MILWAUKEE STATE: WI ZIP: 53201 S-3/A 1 FORM S-3/A As filed with the Securities and Exchange Commission on March 12, 1999 Registration No. 333-73137 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- Pre-Effective Amendment No. 1 to FORM S-3 REGISTRATION STATEMENT Under The Securities Act of 1933 ---------------- WISCONSIN ENERGY CORPORATION WEC CAPITAL TRUST I (Exact name of Registrant as specified WEC CAPITAL TRUST II in its charter) (Exact name of each Registrant as specified in its Trust Agreement) WISCONSIN DELAWARE (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) 39-1391525 (Applied For) (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 231 West Michigan Street c/o Wisconsin Energy Corporation P. O. Box 2949 231 West Michigan Street Milwaukee, Wisconsin 53201 P. O. Box 2949 (414) 221-2345 Milwaukee, Wisconsin 53201 (Address, including zip code, and (414) 221-2345 telephone number, including area code, (Address, including zip code, and of Registrant's principal executive telephone number, including area code, offices) of Registrants' principal executive offices) CALVIN H. BAKER Treasurer and Chief Financial Officer Wisconsin Energy Corporation 231 West Michigan Street P. O. Box 2949 Milwaukee, Wisconsin 53201 (414) 221-2345 (Name, address, including zip code, and telephone number, including area code, of agent for service) ---------------- Copies to: BRUCE C. DAVIDSON GARY W. WOLF Quarles & Brady LLP Cahill Gordon & Reindel 411 East Wisconsin Avenue 80 Pine Street Milwaukee, Wisconsin 53202 New York, New York 10005 (414) 277-5000 (212) 701-3600 Approximate date of commencement of proposed sale of the securities to the public: At such time or from time to time after the effective date of this Registration Statement as the Registrants shall determine in light of market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ---------------- The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. EXPLANATORY NOTE This Registration Statement includes a prospectus to be used in connection with offerings of (a) preferred securities issued by WEC Capital Trusts I and II, severally, (b) debt securities issued by Wisconsin Energy Corporation, including junior subordinated debentures issued to WEC Capital Trusts I and II, and (c) guarantees by Wisconsin Energy Corporation of the preferred securities issued severally by WEC Capital Trusts I and II. Each offering of securities made under this Registration Statement will be made pursuant to this prospectus, with the specifications of the securities offered thereby set forth in an accompanying prospectus supplement. The prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement. The prospectus supplement for the offering of preferred securities to be issued by WEC Capital Trust I follows immediately after this Explanatory Note which is then followed immediately by the related prospectus for the offering of (a) the preferred securities issued by WEC Capital Trusts I and II, severally, (b) the debt securities issued by Wisconsin Energy Corporation and (c) the guarantees of the preferred securities issued severally by WEC Capital Trusts I and II, and certain back-up obligations of Wisconsin Energy Corporation. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this preliminary prospectus supplement is not complete and + +may be changed. We may not sell these securities until the registration + +statement filed with the Securities and Exchange Commission is effective. + +This preliminary prospectus supplement is not an offer to sell these + +securities and it is not soliciting an offer to buy these securities in any + +state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED MARCH 12, 1999 PROSPECTUS SUPPLEMENT (To Prospectus Dated , 1999) 6,000,000 Preferred Securities WEC CAPITAL TRUST I % Trust Preferred Securities (TruPS(R)) ($25 liquidation amount per Preferred Security) Fully and unconditionally guaranteed, as described herein, by WISCONSIN ENERGY CORPORATION A brief description of the % Trust Preferred Securities (TruPS(R)) can be found under "SUMMARY INFORMATION--Q&A" in this prospectus supplement. -------- Application will be made to list the % Trust Preferred Securities (TruPS(R)) on the New York Stock Exchange. If approved, we expect trading of the % Trust Preferred Securities (TruPS(R)) to begin within 30 days after they are first issued. Investing in the Trust Preferred Securities (TruPS(R)) involves risks. See "RISK FACTORS" beginning on page S-6. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense. --------
Per Trust Preferred Security Total ------------------ ---------- Public offering price............................ $ $ Underwriting commissions to be paid by Wisconsin Energy Corporation.............................. See below. See below. Proceeds to WEC Capital Trust I.................. $ $
-------- Underwriting commissions of $ per % Trust Preferred Security (or $ for all % Trust Preferred Securities) (TruPS(R)) will be paid by Wisconsin Energy Corporation; except that for sales of or more % Trust Preferred Securities (TruPS(R)) to a single purchaser, the commissions will be $ per % Trust Preferred Security. We expect that the % Trust Preferred Securities (TruPS(R)) will be ready for delivery in book-entry form only through The Depository Trust Company on or about , 1999. "TruPS(R)" is a registered service mark of Salomon Smith Barney Inc. Salomon Smith Barney Merrill Lynch & Co. Bear, Stearns & Co. Inc. Robert W. Baird & Co. Incorporated , 1999. You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus is accurate as of the date on the front of this prospectus supplement only. Our business, financial condition, results of operations and prospects may have changed since that date. TABLE OF CONTENTS
Page ---- Prospectus Supplement Summary Information--Q&A.................................................. S-3 Risk Factors.............................................................. S-6 Use of Proceeds........................................................... S-9 Selected Financial Information............................................ S-9 Accounting Treatment...................................................... S-9 Description of Securities................................................. S-10 Certain Terms of the Preferred Securities................................. S-10 Certain Terms of the Junior Subordinated Debentures....................... S-11 United States Taxation.................................................... S-12 Underwriting.............................................................. S-17 Prospectus About this Prospectus..................................................... 2 Forward-Looking Statements and Cautionary Factors......................... 2 Wisconsin Energy.......................................................... 2 The WEC Trusts............................................................ 3 Use of Proceeds........................................................... 5 Capitalization............................................................ 5 Ratio of Earnings to Fixed Charges........................................ 5 Description of Debt Securities............................................ 6 Description of Preferred Securities....................................... 15 Description of Guarantees................................................. 26 Relationship Among the Preferred Securities, the Corresponding Junior Subordinated Debentures and the Guarantees............................... 28 Book-Entry Issuance....................................................... 30 Plan of Distribution...................................................... 32 Certain Legal Matters..................................................... 33 Experts................................................................... 34 Where You Can Find More Information....................................... 34
S-2 SUMMARY INFORMATION--Q&A The following information supplements, and should be read together with, the information contained in other parts of this prospectus supplement and in the accompanying prospectus. This summary highlights selected information from this prospectus supplement and the accompanying prospectus to help you understand the % Trust Preferred Securities (TruPS(R)). You should carefully read this prospectus supplement and the accompanying prospectus to understand fully the terms of the preferred securities as well as the tax and other considerations that are important to you in making a decision about whether to invest in the preferred securities. You should pay special attention to the "RISK FACTORS" section beginning on page S-6 of this prospectus supplement to determine whether an investment in the preferred securities is appropriate for you. What are the preferred securities? Each preferred security represents an undivided beneficial interest in the assets of WEC Capital Trust I. Each preferred security will entitle the holder to receive quarterly cash distributions as described in this prospectus supplement. The trust is offering 6,000,000 preferred securities at a price of $25 for each preferred security. Who is the trust? The trust is a Delaware business trust. Its principal place of business is c/o Wisconsin Energy Corporation, 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201. Its telephone number is (414) 221-2345. The trust will sell its preferred securities to the public and its common securities to Wisconsin Energy Corporation (Wisconsin Energy). The trust will use the proceeds from these sales to buy a series of % junior subordinated debentures due , 2039, from Wisconsin Energy with the same financial terms as the preferred securities. Wisconsin Energy will guarantee payments made on the preferred securities as described below. The First National Bank of Chicago will act as property trustee of the trust. Two officers of Wisconsin Energy will act as administrative trustees. First Chicago Delaware Inc. will be the Delaware trustee. The First National Bank of Chicago will act as trustee under the indenture pursuant to which the junior subordinated debentures will be issued, and will act as trustee under the guarantee of Wisconsin Energy. The property trustee, Delaware trustee and administrative trustees are sometimes referred to as the issuer trustees. Who is Wisconsin Energy? Wisconsin Energy is a holding company organized under the laws of Wisconsin in 1981. It has its principal office at 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201. Its telephone number is (414) 221-2345. Wisconsin Energy's principal subsidiary is Wisconsin Electric Power Company, a regulated electric, gas and steam utility. When will you receive quarterly distributions? If you purchase the preferred securities, you are entitled to receive cumulative cash distributions at an annual rate of % of the liquidation amount of $25 per preferred security. Distributions will accumulate from the date the trust issues the preferred securities and will be paid quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning , 1999. S-3 When can payment of your distributions be deferred? Wisconsin Energy can, on one or more occasions, defer interest payments on the junior subordinated debentures for up to 20 consecutive quarterly periods. A deferral of interest payments cannot extend, however, beyond the maturity date of the junior subordinated debentures (which is , 2039). If Wisconsin Energy defers interest payments on the junior subordinated debentures, the trust will also defer distributions on the preferred securities. During this deferral period, distributions will continue to accrue on the preferred securities at an annual rate of % of the liquidation amount of $25 per preferred security. Also, the deferred distributions will themselves accrue interest at an annual rate of % (to the extent permitted by law). Once Wisconsin Energy makes all interest payments on the junior subordinated debentures, with accrued interest, it can again defer interest payments on the junior subordinated debentures if no event of default under the junior subordinated debentures has occurred and is continuing. During any period in which Wisconsin Energy defers interest payments on the junior subordinated debentures, Wisconsin Energy will not be permitted to (with limited exceptions): . pay a dividend or make any distributions on its capital stock or redeem, purchase, acquire or make a liquidation payment on any of its capital stock, or make any guarantee payments with respect to the foregoing; or . make an interest, principal or premium payment on, or repurchase or redeem, any of its debt securities that rank equal to or junior to the junior subordinated debentures. If Wisconsin Energy defers payments of interest on the junior subordinated debentures, the preferred securities will, from the time of the deferral, be treated as being issued with original issue discount ("OID") for United States federal income tax purposes. This means you will be required to recognize interest income with respect to distributions and include those amounts in your gross income for United States federal income tax purposes even though you will not have received any cash distributions relating to that interest income. See "UNITED STATES TAXATION--Interest Income and Original Issue Discount." When can the trust redeem the preferred securities? The trust must redeem all of the outstanding preferred securities and common securities when the junior subordinated debentures are paid at maturity on , 2039. In addition, if Wisconsin Energy redeems any junior subordinated debentures before their maturity date, the trust will use the cash it receives from the redemption to redeem, on a pro rata basis, preferred securities and common securities having a combined liquidation amount equal to the principal amount of the junior subordinated debentures redeemed. Wisconsin Energy can redeem some or all of the junior subordinated debentures before their maturity at % of their principal amount on one or more occasions at any time on or after , 2004. Wisconsin Energy also has the option to redeem the junior subordinated debentures, in whole but not in part, at any time if certain changes in tax or investment company law occur and other specified conditions are satisfied, as more fully described under "CERTAIN TERMS OF THE PREFERRED SECURITIES--Special Event Redemption." In any case, Wisconsin Energy will pay accrued interest to the date of redemption. What is Wisconsin Energy's guarantee of the preferred securities? Wisconsin Energy will guarantee the preferred securities based on: . its obligations to make payments on the junior subordinated debentures; . its obligations under the guarantee; and . its obligations under the trust agreement. S-4 Wisconsin Energy's obligations under the junior subordinated debentures are subordinate and junior in right of payment to all of its senior debt. At December 31, 1998, Wisconsin Energy's senior debt totaled about $67 million, and its subsidiaries had additional aggregate debt of approximately $2.1 billion. The payment of distributions on the preferred securities is guaranteed by Wisconsin Energy under the guarantee, but only to the extent the trust has funds legally and immediately available to make distributions. Wisconsin Energy's obligations under the guarantee are: . subordinate and junior in right of payment to its other liabilities; . equal in rank to its most senior preferred stock, if any is issued; and . senior to its common stock. When could the junior subordinated debentures be distributed to you? Wisconsin Energy has the right to dissolve the trust at any time. If Wisconsin Energy dissolves the trust, the trust will liquidate (after satisfaction of any liabilities to creditors of the trust as provided by applicable law) by distributing the junior subordinated debentures to holders of the preferred securities and the common securities on a pro rata basis. If the junior subordinated debentures are distributed, Wisconsin Energy will use its best efforts to list the junior subordinated debentures on the New York Stock Exchange (NYSE) (or any other exchange on which the preferred securities are then listed) in place of the preferred securities. Will the preferred securities be listed on a stock exchange? Application will be made to list the preferred securities on the NYSE. If approved, trading of the preferred securities is expected to begin within 30 days after they are first issued. Will holders of the preferred securities have any voting rights? Generally, the holders of the preferred securities will not have any voting rights. See "DESCRIPTION OF THE PREFERRED SECURITIES--Voting Rights; Amendment of Each Trust Agreement" in the accompanying prospectus. In what form will the preferred securities be issued? The preferred securities will be represented by one or more global securities that will be deposited with and registered in the name of The Depository Trust Company (DTC) or its nominee. This means that you will not receive a certificate for your preferred securities and that your broker will maintain your position in the preferred securities. Wisconsin Energy expects that the preferred securities will be ready for delivery through DTC on or about , 1999. S-5 RISK FACTORS Your investment in the preferred securities will involve certain risks. You should carefully consider the following discussion of risks, and the other information in this prospectus supplement and the accompanying prospectus, before deciding whether an investment in the preferred securities is suitable for you. Wisconsin Energy's Obligations Under the Guarantee and the Junior Subordinated Debentures Are Subordinated. Wisconsin Energy's obligations under the junior subordinated debentures will rank junior in priority of payment to all of Wisconsin Energy's senior debt. This means that Wisconsin Energy cannot make any payments on the junior subordinated debentures if it defaults on a payment of senior debt and does not cure the default within the applicable grace period or if the senior debt becomes immediately due because of a default and has not yet been paid in full. Although this rule does not apply to a default by one of Wisconsin Energy's subsidiaries, the subsidiaries may be unable to pay dividends or make other distributions to Wisconsin Energy when they are in default. Dividends and other distributions from subsidiaries are Wisconsin Energy's only ongoing source of revenues from which to repay the junior subordinated debentures. At December 31, 1998, senior debt of Wisconsin Energy totaled approximately $67 million and senior debt of its subsidiaries aggregated approximately $2.1 billion. Wisconsin Energy's obligations under the guarantee will rank in priority of payment as follows: . subordinate and junior in right of payment to all its other liabilities; . equal in rank to its most senior preferred stock, if any is issued; and . senior to its common stock. This means that Wisconsin Energy cannot make any payments on the guarantee if it defaults on a payment on any of its other liabilities. In addition, in the event of the bankruptcy, liquidation or dissolution of Wisconsin Energy, its assets would be available to pay obligations under the guarantee only after Wisconsin Energy made all payments on its other liabilities. Neither the preferred securities, the junior subordinated debentures nor the guarantee limit the ability of Wisconsin Energy or its subsidiaries to incur additional debts, including debts that rank senior in priority of payment to the junior subordinated debentures and the guarantee. See "DESCRIPTION OF GUARANTEES--Status of the Guarantees" and "DESCRIPTION OF THE DEBT SECURITIES" in the accompanying prospectus. Wisconsin Energy's Subsidiaries May be Restricted in Providing Funds for Payments to the Trust. Because Wisconsin Energy is a holding company and conducts all of its operations through subsidiaries, holders of debt securities will generally have a junior position to claims of creditors of the subsidiaries, including trade creditors, debt holders, secured creditors, taxing authorities, guarantee holders and any preferred stockholders. Various financing arrangements and regulatory requirements impose restrictions on the ability of Wisconsin Energy's utility subsidiaries to transfer funds to it in the form of cash dividends, loans or advances. Under Wisconsin law, Wisconsin Electric is prohibited from loaning funds, either directly or indirectly, to Wisconsin Energy. The indenture does not limit Wisconsin Energy or its subsidiaries if we decide to issue additional debt. The Guarantee Only Covers Payments if the Trust has Cash Available. The ability of the trust to pay scheduled distributions on the preferred securities, the redemption price of the preferred securities and the liquidation amount of each preferred security is solely dependent upon Wisconsin Energy making the related payments on the junior subordinated debentures when due. S-6 If Wisconsin Energy defaults on its obligations to pay principal or interest on the junior subordinated debentures, the trust will not have sufficient funds to pay distributions, the redemption price or the liquidation amount of each preferred security. In those circumstances, you will not be able to rely upon the guarantee for payment of these amounts. Instead you: . may directly sue Wisconsin Energy or seek other remedies to collect your pro rata share of payments owed; or . may rely on the property trustee to enforce the trust's rights under the junior subordinated debentures. Deferral of Distributions Would Have Tax Consequences for You and May Affect the Trading Price of the Preferred Securities. So long as no event of default under the junior subordinated debentures has occured and is continuing, Wisconsin Energy can, on one or more occasions, defer interest payments on the junior subordinated debentures for up to 20 consecutive quarterly periods. If Wisconsin Energy defers interest payments on the junior subordinated debentures, the trust will defer distributions on the preferred securities during any deferral period. However, distributions would still accumulate and the deferred distributions would themselves accrue interest at the rate of % per annum (to the extent permitted by law). If Wisconsin Energy defers interest payments on the junior subordinated debentures, you will be required to recognize interest income for United States federal income tax purposes (based on your pro rata share of the accrued interest on the junior subordinated debentures held by the trust) before you receive any cash relating to that interest. In addition, you will not receive the cash if you sell the preferred securities before the end of any deferral period or before the record date relating to distributions which are paid. Wisconsin Energy has no current intention of deferring interest payments on the junior subordinated debentures. However, if Wisconsin Energy exercises its right in the future, the preferred securities may trade at a price that does not fully reflect the value of accrued but unpaid interest on the junior subordinated debentures. If you sell the preferred securities during an interest deferral period, you may not receive the same return on investment as someone else who continues to hold the preferred securities. In addition, the existence of Wisconsin Energy's right to defer payments of interest on the junior subordinated debentures may mean that the market price for the preferred securities (which represent an undivided beneficial interest in the trust, substantially all of the assets of which consist of the junior subordinated debentures) may be more volatile than other securities that do not have these rights. See "UNITED STATES TAXATION" for more information regarding the tax consequences of purchasing, holding and selling the preferred securities. Preferred Securities May be Redeemed at Any Time if Specified Changes in Tax or Investment Company Law Occur. If certain changes in tax or investment company law occur and are continuing, and other conditions are satisfied, Wisconsin Energy has the right to redeem the junior subordinated debentures, in whole but not in part, at any time. Any redemption will cause a mandatory redemption of all preferred securities and common securities at a redemption price equal to $25 per security plus any accrued and unpaid distributions. Preferred Securities May be Redeemed at the Option of Wisconsin Energy. At the option of Wisconsin Energy, the junior subordinated debentures may be redeemed, in whole, at any time, or in part, from time to time, on or after , 2004, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest to the redemption date. See "CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES--Redemption." You should assume that Wisconsin Energy will exercise its redemption option if Wisconsin Energy is able to refinance at a lower S-7 interest rate or it is otherwise in Wisconsin Energy's interest to redeem the junior subordinated debentures. If the junior subordinated debentures are redeemed, the trust must redeem the preferred securities and the common securities having an aggregate liquidation amount equal to the aggregate principal amount of junior subordinated debentures to be redeemed. See "DESCRIPTION OF THE PREFERRED SECURITIES-- Redemption or Exchange" in the accompanying prospectus. There Can Be No Assurance as to the Market Prices for the Preferred Securities or the Junior Subordinated Debentures. The preferred securities that an investor may purchase, whether pursuant to the offer made by this prospectus supplement or in the secondary market, or the junior subordinated debentures that a holder of preferred securities may receive upon a dissolution of the trust, may trade at a discount to the price that the investor paid to purchase the preferred securities offered by this prospectus supplement. As a result of Wisconsin Energy's right to defer interest payments on the junior subordinated debentures, the market price of the preferred securities (which represent undivided beneficial ownership interests in the trust, substantially all of the assets of which consist of the junior subordinated debentures) may be more volatile than the market prices of other securities that are not subject to similar optional deferrals. Wisconsin Energy May Dissolve the Trust at Any Time. Wisconsin Energy has the right to dissolve the trust at any time. If Wisconsin Energy decides to exercise its right to dissolve the trust, the trust will liquidate (after satisfaction of any liabilities to creditors of the trust as provided by applicable law) by distributing the junior subordinated debentures to holders of the preferred securities and the common securities on a pro rata basis. If the trust is characterized for United States federal income tax purposes as an association taxable as a corporation at the time it is dissolved or if there is a change in law, the distribution of junior subordinated debentures to you may be a taxable event to you. Under current United States federal income tax law, a distribution of junior subordinated debentures to you on the dissolution of the trust should not be a taxable event to you. Wisconsin Energy has no current intention to cause the dissolution of the trust and the distribution of the junior subordinated debentures. Wisconsin Energy anticipates that it would consider exercising this right in the event that expenses associated with maintaining the trust were substantially greater than currently expected, such as if unfavorable changes in tax law or investment company law occurred. See "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts--Redemption" in the accompanying prospectus. Wisconsin Energy cannot predict the other circumstances under which this right would be exercised. Although Wisconsin Energy will use its best efforts to list the junior subordinated debentures on the NYSE (or any other exchange on which the preferred securities are then listed) if they are distributed, we cannot assure you that the junior subordinated debentures will be approved for listing or that a trading market will exist for these securities. You Have Voting Rights Only Under Limited Circumstances. You will have limited voting rights. In particular, subject to certain exceptions, only Wisconsin Energy can appoint or remove any of the issuer trustees. See "DESCRIPTION OF THE PREFERRED SECURITIES--Voting Rights; Amendment of Each Trust Agreement" in the accompanying prospectus. S-8 USE OF PROCEEDS The trust will use all of the proceeds it receives from the sale of its preferred securities and common securities to purchase junior subordinated debentures from Wisconsin Energy. Wisconsin Energy intends to use the proceeds from its sale of the junior subordinated debentures to the trust to fund a capital contribution of approximately $105 million to Wisvest Connecticut, LLC, an indirect wholly owned subsidiary of Wisconsin Energy, to support its acquisition of certain generating assets from The United Illuminating Company, and for repayment of short term borrowings. Wisconsin Energy's consolidated short term borrowings are expected to approximate $271 million before receipt of the proceeds from the preferred securities and bear interest at a weighted average annual rate of approximately 4.87%. SELECTED FINANCIAL INFORMATION The following is a selection of certain financial information covering Wisconsin Energy. This information is taken from our audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 1997, and from our consolidated financial statements for the year ended December 31, 1998, for which an audit report has not yet been issued. See "WHERE YOU CAN FIND MORE INFORMATION" in the accompanying prospectus.
Years Ended ---------------------------------------------------------------- December 31, December 31, December 31, December 31, December 31, 1998 1997(1) 1996 1995 1994 ------------ ------------ ------------ ------------ ------------ Income Statement Data: (Unaudited) (Dollars in millions except per share amounts) Operating Revenues.... $1,980 $1,790 $1,774 $1,770 $1,742 Operating Income...... $ 277 $ 199 $ 306 $ 329 $ 263 Net Income............ $ 188 $ 61 $ 218 $ 234 $ 181 Earnings Per Share of Common Stock......... $ 1.65 $ 0.54 $ 1.97 $ 2.13 $ 1.67
- -------- (1) In June 1997, Wisconsin Energy recorded a nonrecurring $30.7 million charge to write-off deferred merger costs related to the terminated merger agreement with Northern States Power Company. In December 1997, Wisconsin Energy recorded a nonrecurring $30.0 million charge to write-down equipment purchased for the Kimberly Cogeneration Project. In addition, 1997 earnings decreased due to significantly higher fuel and purchased power expenses; increased other operation and maintenance expenses; higher depreciation expense; and retail electric and gas rate decreases that became effective in February 1997. ACCOUNTING TREATMENT The trust will be treated as Wisconsin Energy's subsidiary, and the accounts of the trust will be included in our financial statements. Currently the FASB is considering the classification of trust preferred securities within the balance sheet. Pending clarification from the FASB, the preferred securities will be presented as a separate line item in our balance sheet and disclosures concerning the preferred securities, the guarantee and the junior subordinated debentures will be included in the notes to the financial statements. We will record distributions paid on the preferred securities as an expense. S-9 DESCRIPTION OF SECURITIES This prospectus supplement discloses the specific terms and provisions of the preferred securities and the junior subordinated debentures and supplements the general description of the terms and provisions of these securities in the accompanying prospectus. These summaries are not meant to be a complete description of each security. However, this prospectus supplement and the accompanying prospectus contain the material terms and conditions for each security. For more information, please refer to the trust agreement, the indenture, the guarantee and the securities resolution of Wisconsin Energy authorizing the issuance of the junior subordinated debentures. Forms of these documents are filed as exhibits to the registration statement of which this prospectus supplement and the accompanying prospectus are a part. All terms used in this prospectus supplement have the meanings given to them in these documents. CERTAIN TERMS OF THE PREFERRED SECURITIES Distributions The preferred securities represent undivided beneficial interests in the assets of the trust. Distributions on the preferred securities are cumulative and will accumulate from the date they are first issued at the annual rate of % of the $25 per preferred security liquidation amount. Distributions will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning , 1999. Distributions not paid when due will accumulate additional distributions, compounded quarterly, at the annual rate of % on the amount of unpaid distributions (to the extent permitted by law). The term "distributions" includes any of these distributions. The amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. At any time and from time to time, so long as no event of default has occurred and is continuing under the junior subordinated debentures, we may defer interest payments for up to 20 consecutive quarters. However, no deferral period will extend beyond the maturity date of the junior subordinated debentures. The trust will similarly defer quarterly distributions on the preferred securities during any deferral period, but the amount of distributions due to you would continue to accumulate at the rate stated above, compounded quarterly to the extent permitted by law. We have no current intention to exercise our right to defer interest payments on the junior subordinated debentures issued to the trust. If we defer interest payments on the junior subordinated debentures, we would be subject to certain restrictions relating to the payment of dividends on or purchases of our capital stock and payments on our debt securities ranking equal with or junior to the junior subordinated debentures. See "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts--Option to Extend Interest Payment Date" in the accompanying prospectus. See the accompanying prospectus for additional terms of the preferred securities, including provisions relating to the deferral of distributions, the payment of distributions and the subordination of the common securities. If distributions are payable on a date that is not a business day, payment will be made on the next business day, without any interest or other payment in respect for any delay. However, if the next business day is in the next calendar year, payment of distributions will be made on the preceding business day. A "business day" means each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which banking institutions in New York City are authorized or obligated by law, regulation or executive order to close, or a day on which the Federal Reserve Bank of New York is not open. S-10 Redemption When we pay the junior subordinated debentures at maturity on , 2039, or upon early redemption, the property trustee will use the proceeds to redeem a like amount of the preferred and common securities. The property trustee will give you at least 30 days, but not more than 60 days, notice before the redemption date. The preferred and (unless there is a default under the junior subordinated debentures) common securities will be redeemed at a price equal to the liquidation amount of $25 per security plus accrued and unpaid distributions to the date of redemption. If less than all of the preferred and common securities are redeemed, then the aggregate liquidation amount of preferred and common securities to be redeemed will be the allocated 3% to the common securities holders, subject to the exceptions as described in "DESCRIPTION OF PREFERRED SECURITIES-- Subordination of Common Securities" in the accompanying prospectus and 97% to the preferred securities holders. The preferred and (unless there is a default under the junior subordinated debentures) common securities to be redeemed will be selected by the property trustee by a method determined to be fair and appropriate by it subject to the subordination provisions of the common securities. Special Event Redemption If a Tax Event or an Investment Company Event, each as defined in the accompanying prospectus (each a Special Event), has occurred and is continuing, we may redeem the junior subordinated debentures, in whole but not in part. This will cause a mandatory redemption of the preferred securities and the common securities, in whole but not in part and within 90 days following the occurrence of the Special Event, at the liquidation amount of $25 per preferred security plus unpaid distributions to the date of redemption. However, in the case of an occurrence of a Tax Event, if we can eliminate, within the 90 day period, the Tax Event by taking some action, such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on us, the trust or the preferred and common security holders, we will pursue that action instead of redemption. We will have no right to redeem the junior subordinated debentures while the trust or the property trustee is pursuing any similar action based on its obligations under the trust agreement. See the accompanying prospectus for other redemption provisions and for redemption procedures. CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES The junior subordinated debentures will be issued as a series pursuant to a securities resolution dated as of , 1999, under the indenture. The junior subordinated debentures are unsecured and rank subordinate and junior in right of payment to all of our senior debt securities and subordinated debt securities (if any). Interest Rate and Maturity The junior subordinated debentures will mature on , 2039, and will bear interest at the annual rate of % of the principal amount thereof, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning , 1999. Interest payments not paid when due will accrue additional interest compounded quarterly at the annual rate of % on the amount of unpaid interest (to the extent permitted by law). The term "interest payments," includes this additional interest. The amount of interest payable for any period will be computed based on a 360-day year of twelve 30-day months. The interest payment provisions for the junior subordinated debentures correspond to the distribution provisions of the preferred securities. S-11 See the accompanying prospectus for other terms of the junior subordinated debentures, including provisions relating to the deferral of interest payments, under "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts" in the accompanying prospectus. Redemption We have the option to redeem the junior subordinated debentures prior to maturity at a redemption price equal to % of the principal amount plus accrued and unpaid interest to the redemption date (a) in whole or in part at any time on or after , 2004, or (b) in whole but not in part if a Special Event has occurred and is continuing. Distribution of Junior Subordinated Debentures If the property trustee distributes the junior subordinated debentures to the preferred and common securities holders upon the dissolution and liquidation of the trust, the junior subordinated debentures will be issued in denominations of $25 and integral multiples thereof. We anticipate that the junior subordinated debentures would be distributed in the form of one or more global securities and DTC, or any successor depositary for the preferred securities, would act as depositary for the junior subordinated debentures. The depositary arrangements for the junior subordinated debentures would be substantially similar to those in effect for the preferred securities. For a description of DTC and the terms of the depository arrangements relating to payments, transfers, voting rights, redemption and other notices and other matters, see "BOOK-ENTRY ISSUANCE" in the accompanying prospectus. UNITED STATES TAXATION General The following summary of the material United States federal income tax consequences of purchasing, holding and selling the preferred securities is based on the views of Quarles & Brady LLP, tax counsel to Wisconsin Energy. This summary is based on (1) the Internal Revenue Code of 1986, as amended ("Code"), (2) income tax regulations issued under the Code, and (3) associated administrative and judicial interpretations, all as they currently exist as of the date of this prospectus supplement. These income tax laws and regulations, however, may change at any time, and any change could be retroactive to the issuance date of the preferred securities. As part of its fiscal year 2000 budget proposal, the Clinton Administration recently made certain proposals aimed at curbing what have become known as "corporate tax shelters." Although we believe that these proposals, if enacted into law in their current form, are not likely to apply to the issuance of the preferred securities (based on both their substance and the proposed effective date), because no specific statutory language has been proposed and because the proposed effective date is subject to change, the effect of the Clinton Administration's fiscal year 2000 budget proposal is uncertain. These income tax laws and regulations are also subject to various interpretations, and the Internal Revenue Service ("IRS") or the courts could later disagree with what we explain in this summary. The IRS has not formally ruled (and we do not intend to seek a ruling) on the tax consequences of purchasing, holding and selling the preferred securities. Accordingly, the IRS could challenge the opinions expressed in this prospectus supplement concerning such consequences, and a court could agree with the IRS. Except where we state otherwise, this summary deals only with preferred securities held as a capital asset (as defined in section 1221 of the Code) by a holder who (a) purchases the preferred securities at their original offering price when the trust originally issues them (an "Initial Holder") and (b) is a US Holder (as defined below). S-12 We do not address all of the tax consequences that may be relevant to a US Holder. We also do not address, except as stated below, any of the tax consequences to holders that are not US Holders or to holders that may be subject to special tax treatment such as banks, thrift institutions, real estate investment trusts, regulated investment companies, insurance companies, brokers and dealers in securities or currencies, tax-exempt investors or persons that will hold the preferred securities as a position in a "straddle," as part of a "hedge," or as part of a "conversion transaction" or other integrated investment. Further, we do not address: . the United States federal income tax consequences to shareholders in, or partners or beneficiaries of, a holder of the preferred securities; . the United States federal alternative minimum tax consequences of the purchase, ownership or sale of the preferred securities; or . any state, local or foreign tax consequences of the purchase, ownership and sale of preferred securities. A "US Holder" is a preferred securities holder who or which is: . a United States citizen or resident individual (or someone treated as a citizen or resident individual for United States federal income tax purposes); . a corporation (including an entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state or other political subdivision; . an estate if its income is subject to United States federal income taxation regardless of its source; or . a trust if (1) a United States court can exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of its substantial decisions. A "Non-US Holder" is a preferred securities holder other than a US Holder. Characterization of the Trust When the trust issues the preferred securities, Quarles & Brady LLP, tax counsel to us and the trust, will give a legal opinion stating that under current law and based on the representations, facts and assumptions described in this prospectus supplement and the accompanying prospectus, and assuming full compliance with the terms of the trust agreement, the underwriting agreement governing the sale of the preferred securities by us to the underwriters and the indenture (and other relevant documents), the trust will be characterized for United States federal income tax purposes as a grantor trust and will not be taxable as a corporation. Accordingly, for United States federal income tax purposes, you will be treated as the beneficial owner of a pro rata undivided interest in the junior subordinated debentures. You must include in your gross income for United States federal income tax purposes all interest on and any gain recognized with respect to your pro rata share of the junior subordinated debentures. Characterization of the Junior Subordinated Debentures We and the trust will agree to treat the junior subordinated debentures as debt for United States federal income tax purposes. By accepting the preferred securities, you agree to treat the junior subordinated debentures as debt and to accept the preferred securities as evidence of an indirect beneficial ownership interest in the junior subordinated debentures. We can give no assurance that this position will not be challenged by the IRS, however, or that such a challenge would not be successful. S-13 Interest Income and Original Issue Discount Under applicable income tax regulations, if there is only a remote likelihood that a company will not make its interest payments on time, then the debt will be considered to be issued without OID. We believe that the likelihood that we will elect to defer interest payments is remote, since this would prevent us from declaring dividends on any of our capital stock or making payments on our debt securities which rank equal with or junior to the junior subordinated debentures until we made up all of the missed interest payments. Accordingly, we will take the position that the junior subordinated debentures will not be issued with OID. As a result, the interest payments on the junior subordinated debentures (which are used to make distributions on the preferred securities) generally will be taxable to you as ordinary income when they are paid or accrued depending on your method of United States federal income tax accounting. If, however, we elect to defer payments of interest, the junior subordinated debentures would at that time be treated as re-issued with OID, and all remaining interest payments would be treated as OID. In that case, all of your taxable interest income on the junior subordinated debentures would have to be included in your gross income for United States federal income tax purposes as it accrued daily on an economic accrual basis even if you otherwise used a cash basis method of tax accounting. This means that you would include interest income for tax purposes, and pay United States federal income taxes, on the interest income you should have received on the interest payment dates even though we did not actually make cash interest payments on those dates. If the likelihood that we will decide to defer any payments of interest were not treated as remote, the junior subordinated debentures would be considered as issued initially with OID in an amount equal to the sum of all the interest payable over the term of the junior subordinated debentures. Again, this would mean that you would have to include interest income in gross income for United States federal income tax purposes as it accrued daily on an economic accrual basis instead of on the dates you actually receive the cash payments. The IRS has not issued any rulings or interpretation which define the meaning of the term "remote" as used in the applicable income tax regulations. The IRS could take a position that differs from what we state in this prospectus supplement. Corporate US Holders Because the income from the preferred securities will not be considered to be dividends for United States federal income tax purposes, corporate US Holders of the preferred securities will not be entitled to a dividends- received deduction for any income from the preferred securities. Market Discount and Acquisition Premium Holders of the preferred securities other than Initial Holders may be considered to have acquired their undivided interests in the junior subordinated debentures with market discount or acquisition premium (as each phrase is defined for United States federal income tax purposes). Such holders are urged to consult with their own tax advisors concerning the tax consequences of purchasing, owning and selling the preferred securities. Sales of Preferred Securities If you sell your preferred securities, you will recognize a gain or loss equal to the difference between the amount realized from the sale of the preferred securities (generally, your selling price minus any portion attributable to accrued but unpaid interest not otherwise includible as OID) and your adjusted tax basis in the preferred securities. If we do not defer interest on the junior subordinated debentures, your adjusted tax basis in the preferred securities generally will equal the initial purchase price that you paid for the preferred securities. If, however, we elect to defer interest payments on the junior subordinated debentures, your adjusted tax basis in the preferred securities generally will equal (1) the initial purchase price that you paid for the preferred securities plus (2) any accrued and unpaid distributions that you were required to treat as OID. S-14 Except to the extent of any accrued market discount, a gain or loss on the sale of preferred securities generally will be a capital gain or loss if the preferred securities are held as capital assets. The maximum regular United States federal income tax rate on capital gains for individual taxpayers is currently 20% for sales and exchanges of capital assets held for more than one year. All net capital gains of a corporate taxpayer are subject to tax at ordinary corporate income tax rates of up to 35%. Subject to limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. If you sell your preferred securities between record dates for payments of distributions on the preferred securities, you will be required to include in gross income for United States federal income tax purposes accrued and unpaid interest not previously included in gross income through the date of sale, to the extent you were not otherwise required to report this income as OID. Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust Under certain circumstances, as described in the accompanying prospectus under "DESCRIPTION OF PREFERRED SECURITIES--Liquidation Distribution Upon Dissolution," the property trustee may distribute the junior subordinated debentures to you in exchange for your preferred securities. This will result in the liquidation and termination of the trust. Such a distribution would not be a taxable event for United States federal income tax purposes, and you would have an aggregate adjusted tax basis in the junior subordinated debentures you received equal to your aggregate adjusted tax basis in your preferred securities. For a description of adjusted tax basis, see the discussion above in "Sales of Preferred Securities." Further, the holding period of the junior subordinated debentures you received would be the same as the period for which you held your preferred securities. If, however, the distribution were caused by a Tax Event and the trust was taxable as a corporation, the distribution would be a taxable event for United States federal income tax purposes. In that case, you could recognize a gain or loss, your adjusted tax basis in the junior subordinated debentures could differ from your adjusted tax basis in the preferred securities, and your holding period for the junior subordinated debentures would not include the period during which you held the preferred securities. The junior subordinated debentures may be redeemed for cash under certain circumstances, and the proceeds would be used by the property trustee to redeem a like amount of preferred securities. Such a redemption of preferred securities would be a taxable event for United States federal income tax purposes, and you would recognize gain or loss as if you had sold the preferred securities for cash. See "Sales of Preferred Securities" above. Non-US Holders Payments to a Non-US Holder will generally not be subject to United States federal withholding tax, provided the holder: . does not own (directly or indirectly, actually or constructively) 10% or more of the total combined voting power of all classes of stock of Wisconsin Energy entitled to vote; . is not a controlled foreign corporation that is related to Wisconsin Energy actually or constructively through stock ownership; and . is not a bank receiving interest described in section 881(c)(3)(A) of the Code. To qualify for this exemption from withholding, the last United States payer in the chain of payment prior to payment to a Non-US Holder ("Withholding Agent") must have received a statement that: . is signed by the holder of the preferred securities under penalties of perjury; . certifies that such holder is not a US Holder; and . provides the name and address of the holder. S-15 The statement may be made on an appropriate IRS Form W-8 or a substantially similar form, and the holder must inform the Withholding Agent of any change in the information on the statement within 30 days of the change. Unless a change in the information on the statement occurs, the statement will be valid through the end of the third calendar year following the year in which the statement is signed. If the preferred securities are held through a securities clearing organization or certain other financial institutions, the organization or institution may provide a signed statement to the Withholding Agent along with a copy of the appropriate IRS Form W-8 or the substitute form provided by the holder. A Non-US Holder will generally not be subject to United States federal withholding or income tax on any gain realized upon the sale or other disposition of the preferred securities. However, if a Non-US Holder holds the preferred securities in connection with a trade or business conducted in the United States, or is present in the United States in certain circumstances, the holder may be subject to income tax on all income and gains recognized. Backup Withholding You may be subject to a "backup withholding" tax of 31% on distributions made on the preferred securities and on the entire price received on the sale of the preferred securities if you: . fail to provide your social security or taxpayer identification number to your broker; . provide your broker with an incorrect social security or tax identification number; . fail to provide your broker with a certified statement that your social security or tax identification number is correct and that you are not subject to backup withholding; or . improperly report interest and dividends on your tax return. Backup withholding, however, may not apply to interest payments made to certain exempt recipients such as corporations or tax-exempt organizations. Backup withholding generally will not apply to payments made to a Non-US Holder who provides the required certificate or otherwise establishes an exemption from backup withholding. Payments of the proceeds of a disposition of the preferred securities by a United States office of a broker generally will be subject to backup withholding at a rate of 31% unless the Non-US Holder certifies under penalties of perjury that it is a Non-US Holder or otherwise establishes an exemption. Any withheld amounts will be allowed as a credit against your United States federal income tax, provided the required information is provided to the IRS. The tax information above is intended only as a summary of material United States federal tax consequences of an investment in the trust. We urge you to consult with your own tax advisor as to the United States federal, state, local, foreign and other tax consequences associated with purchasing, owning and selling the preferred securities. The statements of United States tax laws described above are based on the laws in force as of the date of this prospectus supplement, and are subject to any changes in United States law occurring after that date. S-16 UNDERWRITING Under the terms and subject to the conditions of the underwriting agreement dated , 1999, each underwriter named below, for whom Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc., and Robert W. Baird & Co. Incorporated are acting as representatives, has severally agreed to purchase from the trust, and the trust has agreed to sell to such underwriter, the number of preferred securities set forth opposite the name of such underwriter below.
Number of Name Preferred Securities ---- -------------------- Salomon Smith Barney Inc............................. Merrill Lynch, Pierce, Fenner & Smith Incorporated... Bear, Stearns & Co. Inc.............................. Robert W. Baird & Co. Incorporated................... ---------- Total............................................ 6,000,000 ==========
The underwriters are obligated to take and pay for the total number of preferred securities offered hereby if any such preferred securities are purchased. In the event of default by any underwriter, the underwriting agreement provides that, in certain circumstances, purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. The underwriting agreement provides that we and the trust will indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Our expenses associated with the offer and sale of the preferred securities are estimated to be $ . In view of the fact that the proceeds of the sale of the preferred securities will ultimately be used to purchase our junior subordinated debentures, the underwriting agreement provides that we will pay as compensation to the underwriters $ per preferred security for the accounts of the several underwriters ($ in the aggregate); provided that such compensation will be $ per preferred security for sales of or more preferred securities to a single purchaser. Therefore, to the extent of such sales, the actual amount of underwriters' compensation will be less than the aggregate amount specified in the preceding sentence. The underwriters propose to offer the preferred securities, in part, directly to the public at the initial public offering price set forth on the cover page of this prospectus supplement, and to certain dealers at such price less a concession of $ per preferred security. The underwriters may allow, and such dealers may reallow, a concession not in excess of $ per preferred security to certain brokers and dealers. After the preferred securities are released for sale to the public, the offering price and other selling terms may from time to time be varied by the representatives of the underwriters. Application will be made to list the preferred securities on the NYSE. If approved, trading of the preferred securities on the NYSE is expected to commence within a 30-day period after the initial delivery of the preferred securities. Prior to this offering, there has been no public market for the preferred securities. In order to meet one of the requirements for listing the preferred securities on the NYSE, the underwriters will undertake to sell lots of 100 or more preferred securities to a minimum of 400 beneficial holders. S-17 We and the trust have agreed, during the period of 30 days from the date of the underwriting agreement, not to sell, offer to sell, grant any option for the sale of, or otherwise dispose of any preferred securities, any security convertible into or exchangeable into or exercisable for preferred securities or the junior subordinated debentures or any debt securities substantially similar to the junior subordinated debentures or equity securities substantially similar to the preferred securities (except for the junior subordinated debentures and the preferred securities issued pursuant to the underwriting agreement), without the prior written consent of the representatives. In order to facilitate the offering of the preferred securities, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the preferred securities. Specifically, the underwriters may overallot in connection with the offering, creating a short position in the preferred securities for their own account. In addition, to cover overallotments or to stabilize the price of the preferred securities, the underwriters may bid for, and purchase, the preferred securities in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the preferred securities in the offering, if the syndicate repurchases previously distributed preferred securities in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the preferred securities above independent market levels. The underwriters are not required to engage in these activities, and if commenced, may end any of these activities at any time. Certain of the underwriters and their affiliates have in the past provided, and may in the future provide, investment and/or commercial banking services to us and our affiliates in the ordinary course of business. S-18 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED MARCH 12, 1999 PROSPECTUS $300,000,000 WISCONSIN ENERGY CORPORATION Debt Securities ----------- WEC CAPITAL TRUST I WEC CAPITAL TRUST II Preferred Securities Fully and Unconditionally Guaranteed as described herein by Wisconsin Energy Corporation THE WEC TRUSTS: . will issue and sell preferred securities (representing undivided beneficial interests in a trust) to the public; . will issue and sell common securities to Wisconsin Energy; and . will use the proceeds from these sales to buy a series of junior subordinated debentures from Wisconsin Energy with terms that correspond to the preferred securities. WISCONSIN ENERGY: . will pay principal and interest on the junior subordinated debentures, subject to payment on its more senior debt; . may choose to distribute these junior subordinated debentures pro-rata to the preferred and common securities holders if it dissolves the trust; . will fully and unconditionally guarantee the preferred securities on a junior subordinated level based on: l its obligations to make payments on the corresponding junior subordinated debentures; l its obligations under the preferred securities guarantee (its payment obligations are subject to payment on all of its general liabilities); and l its obligations under the trust agreement; and . may also issue and sell other debt securities to the public. We urge you to read this prospectus and the prospectus supplement carefully before you make your investment decision. - -------------------------------------------------------------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 1999. ABOUT THIS PROSPECTUS In this prospectus, "we" and "Wisconsin Energy" refer to Wisconsin Energy Corporation and a "trust" or "WEC Trust" refers to either WEC Capital Trust I or WEC Capital Trust II, which are the Delaware statutory business trusts that we have formed to issue the preferred securities. This prospectus is part of a registration statement that we filed with the SEC utilizing a "shelf" registration process. Under this shelf process, Wisconsin Energy or the WEC Trusts may issue and sell to the public any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $300,000,000. This prospectus provides you with only a general description of the securities we or the WEC Trusts may issue and sell. Each time we or the trusts issue and sell securities, we will provide a prospectus supplement that will contain specific information about the particular securities and terms of that offering. In the prospectus supplement, we will describe the interest rate, payment dates, maturity and other terms of any debt securities that we issue and sell, and the rights to periodic cash distributions, payments on liquidation and other terms of a trust's preferred securities. The prospectus supplement will also describe the proceeds and uses of proceeds from the securities, together with the names and compensation of the underwriters through whom the securities are being issued and sold, and other important considerations for investors. It may also add to, update or change information contained in this prospectus. Unless we say otherwise in the prospectus supplement, we may redeem our debt securities for cash, or cause the trusts to liquidate and give investors our debt securities in place of the trusts' preferred securities. FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS We have included or may include statements in this prospectus and any prospectus supplement (including documents incorporated by reference) that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You will be able to recognize a forward-looking statement because it contains the words "anticipate," "believe," "estimate," "expect," "project," "objective" or a similar expression to identify it as a forward-looking statement. We caution you that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from the future results, performance or achievements we have anticipated in such forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with those statements, factors that could cause our actual results to differ materially from those contemplated in the forward-looking statements include factors we have described under the captions "Factors Affecting Results of Operations" and "Cautionary Factors" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Annual Report on Form 10-K or under similar captions in the other documents we have incorporated by reference. WISCONSIN ENERGY We were incorporated in the state of Wisconsin in 1981 and became a holding company in 1986. Our principal subsidiary is Wisconsin Electric Power Company, an electric, gas and steam utility. We also have subsidiaries engaged in various non-utility businesses. We conduct our operations in the following four business segments. . Electric Operations: Our Wisconsin electric operations generate, transmit, distribute and sell electric energy in a territory of approximately 12,000 square miles with a population estimated at 2,300,000 in southeastern (including the metropolitan Milwaukee area), east central and northern Wisconsin and in the Upper Peninsula of Michigan. In May 1998, we acquired Edison Sault Electric 2 Company, an electric utility which serves approximately 21,000 residential, commercial and industrial customers in Michigan's eastern Upper Peninsula. We operate Wisconsin Electric and Edison Sault as separate utility subsidiaries within their existing historical service territories. Wisconsin Electric and Edison Sault continue to be separately regulated by their respective states. . Gas Operations: Our Wisconsin gas operations purchase, distribute and sell natural gas to retail customers and transport customer-owned gas in four distinct service areas of about 2,800 square miles in Wisconsin: west and south of the City of Milwaukee, the Appleton area, the Prairie du Chien area and northern Wisconsin. The gas service territory, which has an estimated population of approximately 1,200,000, is largely within Wisconsin Electric's electric service area. . Steam Operations: Our steam operations generate, distribute and sell steam supplied by Wisconsin Electric's Valley and Milwaukee County Power Plants. Steam is used by customers for space heating and process applications in the metropolitan Milwaukee area. . Non-Utility Operations: Our non-utility subsidiaries are devoted primarily to stimulating economic growth in the Wisconsin Electric service area and to capitalizing on diversified investment opportunities for stockholders. We are an exempt holding company by order of the SEC under Section 3(a)(1) of the Public Utility Holding Company Act of 1935, as amended. As a result, we are exempt from the provisions of that Act, other than with respect to certain acquisitions of securities of a public utility. Our principal executive offices are located at 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201. Our telephone number is (414) 221-2345. THE WEC TRUSTS Each WEC Trust is a statutory business trust that we have formed under Delaware law. For each trust there is a trust agreement signed by us as depositor, by The First National Bank of Chicago as property trustee, by First Chicago Delaware Inc. as Delaware trustee and by two of our employees as administrative trustees. For each trust there is also a certificate of trust filed with the Delaware Secretary of State. When we are ready to issue and sell securities through the trust, the trust agreement will be amended to read substantially like the form of amended and restated trust agreement that is filed with the SEC as an exhibit to the registration statement of which this prospectus is a part. Each trust agreement will be qualified as an indenture under the Trust Indenture Act of 1939. The Issuance and Sale of the Trust Securities We have created each WEC Trust solely to: . issue and sell its trust securities (including the preferred securities and the common securities), which represent proportionate beneficial ownership interests in that WEC Trust and its assets; . use the proceeds from the sale of the trust securities to buy from us a series of our junior subordinated debentures, which will be the only assets of that WEC Trust; . maintain its status as a grantor trust for federal income tax purposes; and . engage in only those other activities necessary or convenient to accomplish the other purposes. Because the WEC Trusts' only assets will be junior subordinated debentures that we issue to them, our payments on those debt securities will be the only source of funds to be paid to purchasers or owners of the trust securities. Each of the WEC Trusts is a separate legal entity, so the assets of one will not be available to satisfy the obligations of any other similar trust we may create. 3 We will acquire and own all of the common securities of each WEC Trust. The common securities will have an aggregate liquidation amount of at least 3% of the total capital of each WEC Trust. The remainder, representing up to 97% of the ownership interests in the WEC Trust, will be preferred securities of the WEC Trust which may be sold to the public. The common securities and the preferred securities will have substantially the same terms, including the same priority of payment, and will receive proportionate payments from the WEC Trust in respect of distributions and payments upon liquidation, redemption or otherwise at the same times, with one exception: if we default on the corresponding junior subordinated debentures that we issue to the WEC Trust and do not cure the default within the times specified in the indenture governing our issuance of our junior subordinated debentures, our rights to payments as holder of the common securities will be subordinated to the rights of the holders of the preferred securities. See "DESCRIPTION OF PREFERRED SECURITIES-- Subordination of Common Securities." Unless we say otherwise in the applicable prospectus supplement, each WEC Trust will have a term of approximately 50 years. However, a WEC Trust may dissolve earlier as provided in the applicable trust agreement and the prospectus supplement. Each WEC Trust's business and affairs will be conducted by its trustees, whom we will appoint as holder of the common securities. Unless we say otherwise in the applicable prospectus supplement, the trustees for each WEC Trust will be: . The First National Bank of Chicago, as the property trustee . First Chicago Delaware Inc., as the Delaware trustee . Two of our officers, as individual administrative trustees. We refer to all of these trustees collectively as the "issuer trustees." The First National Bank of Chicago, as property trustee, will act as sole indenture trustee under each trust agreement for purposes of compliance with the Trust Indenture Act. Unless we say otherwise in the applicable prospectus supplement, The First National Bank of Chicago will also act as trustee under our guarantee agreement relating to the preferred securities. See "DESCRIPTION OF GUARANTEES" and "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts." As the holder of the common securities of a WEC Trust, we will ordinarily have the right to appoint, remove or replace the property trustee or the Delaware trustee for each WEC Trust. However, if we are in default with respect to the corresponding junior subordinated debentures issued to that WEC Trust (and we haven't cured that default within the time specified in the indenture), then the holders of a majority in liquidation amount of that WEC Trust's outstanding preferred securities will be entitled to appoint, remove or replace the property trustee and/or the Delaware trustee. In no event will the holders of the preferred securities have the right to vote to appoint, remove or replace the administrative trustees; we retain that right exclusively as the holder of the common securities. The duties and obligations of each issuer trustee are governed by the applicable trust agreement. Pursuant to the indenture and the trust agreement, we promise to pay all fees and expenses related to each WEC Trust and the offering of the preferred securities and will pay, directly or indirectly, all ongoing costs, expenses and liabilities of each WEC Trust, except obligations under the preferred securities and the common securities. The WEC Trusts have no separate financial statements. Separate financial statements would not be material to holders of the preferred securities because the WEC Trusts have no independent operations. They exist solely for the limited functions summarized above. We will guarantee the preferred securities as described later in this prospectus. 4 The principal executive office of each WEC Trust is c/o Wisconsin Energy Corporation, 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201, and its telephone number is (414) 221-2345. USE OF PROCEEDS Each WEC Trust will use all of the proceeds it receives from the sale of its trust securities (including both the preferred securities and the common securities) to purchase from us the corresponding junior subordinated debentures that will provide the funds for the trust's payments to purchasers of its trust securities. Except as otherwise described in the applicable prospectus supplement, we intend to use the net proceeds from the sale of our debt securities (either to the trusts or directly to the public) for investments (including funding equity contributions to affiliates), for repayment of borrowings, and/or for general corporate purposes. We may temporarily invest any funds not required immediately for those purposes in short-term marketable securities. We expect to borrow money or sell securities from time to time, but we cannot predict the precise amounts or timing of doing so. For current information, look at our current filings with the SEC. See "WHERE YOU CAN FIND MORE INFORMATION." CAPITALIZATION The following table summarizes our historical capitalization as of December 31, 1998, and our capitalization as adjusted to reflect the assumed issuance and sale of an aggregate of $300 million liquidation amount of preferred securities and the related common securities of the trusts. The long-term debt shown does not include $119 million of long term debt due within one year.
December 31, 1998 (Unaudited) --------------------- Actual As Adjusted ------ -------------- Amount Amount Percent ------ ------ ------- (Dollars in millions) Capital Structure: Long Term Debt......................................... $1,749 $1,749 43.9% Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Debentures of the Company............................. -- 300 7.5% Preferred Stock of Wisconsin Electric Power Company Without Mandatory Redemption Requirements............. 31 31 0.8% Common Equity.......................................... 1,903 1,903 47.8% ------ ------ ----- Total Capitalization................................. $3,683 $3,983 100.0% ====== ====== ===== Short Term Debt.......................................... $ 287 $ 101 2.5% ====== ====== =====
RATIO OF EARNINGS TO FIXED CHARGES Our historical ratios of earnings to fixed charges are described below for the periods indicated.
Year Ended December 31, ------------------------ 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges............... 2.8x 1.7x 4.0x 4.1x 3.4x
These computations include us and our subsidiaries. For these ratios, "earnings" is determined by adding net income (including total allowances for funds used during construction) plus current and deferred income taxes. "Fixed charges" consists of interest charges, amortization of debt expenses, amounts representing the interest factors of nuclear fuel rental expense and for a long-term power purchase contract accounted for as a capital lease, and an amount equal to the earnings before income taxes that would be required to pay preferred dividends of wholly owned subsidiaries. See "WHERE YOU CAN FIND MORE INFORMATION." 5 DESCRIPTION OF DEBT SECURITIES The debt securities, including any junior subordinated debentures that we issue to a WEC Trust, will be our direct unsecured general obligations. The debt securities will be either senior debt securities, subordinated debt securities or junior subordinated debt securities, including the junior subordinated debentures that are issued to the WEC Trusts. The debt securities will be issued in one or more series under the indenture described above between us and The First National Bank of Chicago, as trustee and under a securities resolution (which may be in the form of a resolution or a supplemental indenture) authorizing the particular series. We have summarized selected provisions of the indenture below. The summary is not complete. The form of the indenture and a form of securities resolution are filed as exhibits to the registration statement of which this prospectus is a part. The securities resolution for each series also has been or will be filed or incorporated by reference as an exhibit to the registration statement. You should read the indenture and the applicable securities resolution for provisions that may be important to you. In the summary below, we have included references to section numbers in the indenture so that you can easily find those provisions. The particular terms of any debt securities we offer will be described in the related prospectus supplement, along with any applicable modifications of or additions to the general terms of the debt securities described below and in the indenture. For a description of the terms of any series of debt securities, you should also review both the prospectus supplement relating to that series and the description of the debt securities set forth in this prospectus before making an investment decision. General The indenture does not significantly limit our operations. In particular, it does not: . limit the amount of debt securities that we can issue under the indenture; . limit the number of series of debt securities that we can issue from time to time; . restrict the total amount of debt that we or our subsidiaries may incur; or . contain any covenant or other provision that is specifically intended to afford any holder of the debt securities special protection in the event of highly leveraged transactions or any other transactions resulting in a decline in our ratings or credit quality. As of the date of this prospectus, there are no debt securities outstanding under the indenture. The ranking of a series of debt securities with respect to all of our indebtedness will be established by the securities resolution creating the series. Although the indenture permits the issuance of debt securities in other forms or currencies, the debt securities covered by this prospectus will only be denominated in U.S. dollars in registered form without coupons, unless otherwise indicated in the applicable prospectus supplement. Terms A prospectus supplement and a securities resolution relating to the offering of any series of debt securities will include specific terms relating to the offering. The terms will include some or all of the following: . the designation, aggregate principal amount, currency or composite currency and denominations of the debt securities; . the price at which the debt securities will be issued and, if an index, formula or other method is used, the method for determining amounts of principal or interest; . the maturity date and other dates, if any, on which the principal of the debt securities will be payable; 6 . the interest rate or rates, if any, or method of calculating the interest rate or rates which the debt securities will bear; . the date or dates from which interest will accrue and on which interest will be payable, and the record dates for the payment of interest; . the manner of paying principal and interest on the debt securities; . the place or places where principal and interest will be payable; . the terms of any mandatory or optional redemption of the debt securities by us, including any sinking fund; . the terms of any conversion or exchange right; . the terms of any redemption of debt securities at the option of holders; . any tax indemnity provisions; . if payments of principal or interest may be made in a currency other than U.S. Dollars, the manner for determining such payments; . the portion of principal payable upon acceleration of any discounted debt security (as described below); . whether and upon what terms debt securities may be defeased (which means that we would be discharged from our obligations by depositing sufficient cash or government securities to pay the principal, interest, any premiums and other sums due to the stated maturity date or a redemption date of the debt securities of the series); . whether any events of default or covenants in addition to or instead of those set forth in the indenture apply; . provisions for electronic issuance of debt securities or for debt securities in uncertificated form; . the ranking of the debt securities, including the relative degree, if any, to which the debt securities of such series are subordinated to one or more other series of debt securities in right of payment, whether outstanding or not; . any provisions relating to extending or shortening the date on which the principal and premium, if any, of the debt securities of the series is payable; . any provisions relating to the deferral of payment of any interest; . if the series of debt securities is to be issued to a WEC Trust, the forms of the related trust agreement and guarantee agreement; . the additions or changes, if any, to the indenture with respect to that series of debt securities to permit or facilitate the issuance of that series of debt securities to a WEC Trust; and . any other terms not inconsistent with the provisions of the indenture, including any covenants or other terms that may be required or advisable under United States or other applicable laws or regulations, or advisable in connection with the marketing of the debt securities. (Section 2.01) We may issue debt securities of any series as registered debt securities, bearer debt securities or uncertificated debt securities, and in such denominations as we specify in the securities resolution and prospectus supplement for the series. (Section 2.01) In connection with its original issuance, no bearer debt security will be offered, sold or delivered to any location in the United States. We may deliver a bearer debt security in definitive form in connection with its original issuance only if a certificate in a form we specify to comply with United States laws and regulations is presented to us. (Section 2.04) 7 A holder of registered debt securities may request registration of a transfer upon surrender of the debt security being transferred at any agency we maintain for that purpose and upon fulfillment of all other requirements of the agent. (Sections 2.03 and 2.07) We may issue debt securities under the indenture as discounted debt securities to be offered and sold at a substantial discount from the principal amount of those debt securities. Special United States federal income tax and other considerations applicable to discounted debt securities will be described in the related prospectus supplement. A discounted debt security is a debt security where the amount of principal due upon acceleration is less than the stated principal amount. (Sections 1.01 and 2.10) Conversion and Exchange The terms, if any, on which debt securities of any series will be convertible into or exchangeable for our common stock or other equity or debt securities, property, cash or obligations or a combination of any of the foregoing, will be summarized in the prospectus supplement relating to the series. The terms may include provisions for conversion or exchange, either on a mandatory basis, at the option of the holder or at our option. (Section 9.01) Certain Covenants Any restrictive covenants which may apply to a particular series of debt securities will be described in the related prospectus supplement. Ranking of Debt Securities Unless stated otherwise in a prospectus supplement, the debt securities issued under the indenture will rank equally and ratably with our other unsecured and unsubordinated debt. The debt securities will not be secured by any properties or assets and will represent our unsecured debt. Because we are a holding company and conduct all of our operations through subsidiaries, holders of debt securities will generally have a junior position to claims of creditors of our subsidiaries, including trade creditors, debt holders, secured creditors, taxing authorities, guarantee holders and any preferred stockholders. Various financing arrangements and regulatory requirements impose restrictions on the ability of our utility subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. Under Wisconsin law, Wisconsin Electric is prohibited from loaning funds, either directly or indirectly, to us. The indenture does not limit us or our subsidiaries if we decide to issue additional debt. Some of our operating subsidiaries have ongoing corporate debt programs used to finance their business activities. As of December 31, 1998, our subsidiaries had approximately $2.1 billion of outstanding debt, and preferred stock issued by Wisconsin Electric was entitled to annual dividends of approximately $1.2 million. Successor Obligor The indenture provides that, unless otherwise specified in the securities resolution establishing a series of debt securities, we will not consolidate with or merge into, or transfer all or substantially all of our assets to, another company, unless: . that company is organized under the laws of the United States or a state or is organized under the laws of a foreign jurisdiction and consents to the jurisdiction of the courts of the United States or a state; . that company assumes by supplemental indenture all of our obligations under the indenture, the debt securities and any coupons; . all required approvals of any regulatory body having jurisdiction over the transaction shall have been obtained; and . immediately after the transaction no default exists under the indenture. 8 The successor shall be substituted for us as if it had been an original party to the indenture, securities resolutions and debt securities. Thereafter the successor may exercise our rights and powers under the indenture, the debt securities and any coupons, and all of our obligations under those documents will terminate. (Section 5.01) Exchange of Debt Securities Registered debt securities may be exchanged for an equal principal amount of registered debt securities of the same series and date of maturity in the denominations requested by the holders upon surrender of the registered debt securities at an agency we maintain for that purpose and upon fulfillment of all other requirements of the agent. (Section 2.07) Defaults and Remedies Unless the securities resolution establishing the series provides for different events of default, in which event the prospectus supplement will describe the change, an event of default with respect to a series of debt securities will occur if: . we default in any payment of interest on any debt securities of that series when the payment becomes due and payable and the default continues for a period of 60 days; . we default in the payment of the principal and premium, if any, of any debt securities of the series when those payments become due and payable at maturity or upon redemption, acceleration or otherwise; . we default in the payment or satisfaction of any sinking fund obligation with respect to any debt securities of the series as required by the securities resolution establishing the series and the default continues for a period of 60 days; . we default in the performance of any of our other agreements applicable to the series and the default continues for 90 days after the notice specified below; . pursuant to or within the meaning of any Bankruptcy Law we: --commence a voluntary case, --consent to the entry of an order for relief against us in an involuntary case, --consent to the appointment of a custodian for us or for all or substantially all of our property, or --make a general assignment for the benefit of our creditors; . a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that remains unstayed and in effect for 60 days and that: --is for relief against us in an involuntary case, --appoints a custodian for us or for all or substantially all of our property, or --orders us to liquidate; or . there occurs any other event of default provided for in such series. (Section 6.01) The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or a similar official under any Bankruptcy Law. (Section 6.01) A default under the indenture means any event which is, or after notice or passage of time would be, an event of default under the indenture. A default under the fourth bullet point above is not an event of default until the Trustee or the holders of at least 25% in principal amount of the series notify us of the default and we do not cure the default within the time specified after receipt of the notice. (Section 6.01) 9 If an event of default occurs under the indenture and is continuing on a series, the trustee by notice to us, or (except as provided in the next sentence) the holders of at least 25% in principal amount of the series by notice both to us and to the trustee, may declare the principal of and accrued interest on all the debt securities of the series to be due and payable immediately. In the case of a series issued to a WEC Trust, if, upon an event of default, the trustee or the holders of not less than 25% in aggregate principal amount of the series fail to declare the principal of all the debt securities of that series to be immediately due and payable, then the holders of 25% in aggregate liquidation amount of the preferred securities then outstanding shall have the right to do so by notice to us and to the trustee. Discounted debt securities may provide that the amount of principal due upon acceleration is less than the stated principal amount. Except as provided in the next sentence, the holders of a majority in principal amount of a series of debt securities, by notice to the trustee, may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing events of default on the series have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. In the case of a series of debt securities issued to a WEC Trust, the holders of a majority in aggregate liquidation amount of the preferred securities then outstanding shall also have the right to rescind the acceleration and its consequences with respect to such series, subject to the same conditions set forth above. (Section 6.02) If an event of default occurs and is continuing on a series, the trustee may pursue any available remedy to collect principal or interest then due on the series, to enforce the performance of any provision applicable to the series, or otherwise to protect the rights of the trustee and holders of the series. (Section 6.03) In the case of a series issued to a WEC Trust, any holder of the related preferred securities of the WEC Trust shall have the right, upon the occurrence and continuance of an event of default with respect to the series following our failure to pay timely interest, principal or premium as described above, to sue us directly. In that lawsuit the holder of the related preferred securities can force us to pay to the holder the principal of, and premium, if any, and interest on, the debt securities having a principal amount equal to the aggregate liquidation amount of the preferred securities held by that holder. (Section 6.06) The trustee may require indemnity satisfactory to it before it performs any duty or exercises any right or power under the indenture or the debt securities which it reasonably believes may expose it to any loss, liability or expense. (Section 7.01) With some limitations, holders of a majority in principal amount of the debt securities of the series may direct the trustee in its exercise of any trust or power with respect to that series. (Section 6.05) Except in the case of default in payment on a series, the trustee may withhold notice of any continuing default if it determines that withholding the notice is in the interest of holders of the series. (Section 7.04) We are required to furnish the trustee annually a brief certificate as to our compliance with all conditions and covenants under the indenture. (Section 4.04) The indenture does not have a cross-default provision. Thus, a default by us on any other debt, including any other series of debt securities, would not constitute an event of default under the indenture. A securities resolution may provide for a cross-default provision; in that case the prospectus supplement will describe the terms of that provision. Amendments and Waivers The indenture and the debt securities or any coupons of the series may be amended, and any default may be waived. Unless the securities resolution provides otherwise, in which event the prospectus supplement will describe the revised provision, we and the trustee may amend the debt securities, the indenture and any coupons with the written consent of the holders of a majority in principal amount of the debt securities of all series affected voting as one class. However, in the case of a series of debt securities issued to a WEC Trust, we are not permitted to adopt an amendment that adversely affects the holders of the preferred securities in any material respect, and no termination of the indenture shall occur, without the prior consent of the holders of not less than a majority in aggregate liquidation amount of the preferred securities then outstanding unless and until 10 the principal (and premium, if any) of the debt securities of that series and all accrued and unpaid interest thereon have been paid in full. Furthermore, in the case of a series issued to a WEC Trust, no amendment can be made to the provisions of the indenture allowing holders of preferred securities to sue directly following our failure to make timely payments on the debt securities as described above without the prior consent of the holder of each preferred security then outstanding unless and until the principal (and premium, if any) of the debt securities of the series and all accrued and unpaid interest thereon have been paid in full. (Section 10.02) Without the consent of each debt security holder affected, no amendment or waiver may : . reduce the principal amount of debt securities whose holders must consent to an amendment or waiver; . reduce the interest on or change the time for payment of interest on any debt security (but this does not affect our right to elect to defer one or more payments of interest as described below under "Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts--Option to Extend Interest Payment Date"); . change the fixed maturity of any debt security (subject to any right we may have retained in the securities resolution and described in the prospectus supplement); . reduce the principal of any non-discounted debt security or reduce the amount of the principal of any discounted debt security that would be due on acceleration thereof; . change the currency in which the principal or interest on a debt security is payable; . make any change that materially adversely affects the right to convert or exchange any debt security; or . waive any default in payment of interest on or principal of a debt security. (Section 10.02) Without the consent of any debt security holder, we may amend the indenture or the debt securities: . to cure any ambiguity, omission, defect, or inconsistency; . to provide for the assumption of our obligations to debt security holders by the surviving company in the event of a merger or consolidation requiring such assumption; . to provide that specific provisions of the indenture shall not apply to a series of debt securities not previously issued; . to create a series of debt securities and establish its terms; . to provide for a separate trustee for one or more series of debt securities; or . to make any change that does not materially adversely affect the rights of any debt security holder. (Section 10.01) Legal Defeasance and Covenant Defeasance Debt securities of a series may be defeased at any time in accordance with their terms and as set forth in the indenture and described briefly below, unless the securities resolution establishing the terms of the series otherwise provides. Any defeasance may terminate all of our obligations (with limited exceptions) with respect to a series of debt securities and the indenture ("legal defeasance"), or it may terminate only our obligations under any restrictive covenants which may be applicable to a particular series ("covenant defeasance"). We may exercise our legal defeasance option even though we have also exercised our covenant defeasance option. If we exercise our legal defeasance option, that series of debt securities may not be accelerated because of an event of default. If we exercise our covenant defeasance option, that series of debt securities may not be accelerated by reference to any restrictive covenants which may be applicable to that particular series. (Section 8.01) 11 To exercise either defeasance option as to a series of debt securities, we must: . irrevocably deposit in trust (the "defeasance trust") with the trustee or another trustee money or U.S. government obligations; . deliver a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. government obligations, without reinvestment, plus any deposited money without investment, will provide cash at the times and in the amounts necessary to pay the principal and interest when due on all debt securities of the series to maturity or redemption, as the case may be; and . comply with certain other conditions. In particular, we must obtain an opinion of tax counsel that the defeasance will not result in recognition of any gain or loss to holders for federal income tax purposes. U.S. government obligations are direct obligations of (a) the United States or (b) an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed by the United States, which, in either case (a) or (b), have the full faith and credit of the United States of America pledged for payment and which are not callable at the issuer's option. It also includes certificates representing an ownership interest in such obligations. (Section 8.02) Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts General. The junior subordinated debentures that we issue to a WEC Trust may be issued in one or more series under the indenture with terms corresponding to the terms of a series of preferred securities issued by that WEC Trust. Concurrently with the issuance of each WEC Trust's preferred securities, the WEC Trust will invest the proceeds from the sale of the preferred securities and the consideration we pay for the common securities in a series of corresponding junior subordinated debentures that we will issue to the WEC Trust. Each series of corresponding junior subordinated debentures: . will be unsecured; . will be in the principal amount equal to the aggregate stated liquidation amount of the preferred securities and the common securities of the WEC Trust; and . will rank equally with all other series of junior subordinated debt securities in terms of priority of payment. Unless provided otherwise in the prospectus supplement, holders of the preferred securities issued by a WEC Trust that owns a series of corresponding junior subordinated debentures will have the rights summarized above in connection with modifications to the indenture or upon occurrence of a trust event of default. See "Amendments and Waivers" and "Defaults and Remedies," above and "RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEES--Enforcement Rights of Holders of Preferred Securities." The prospectus supplement will describe specific terms relating to the offering of the corresponding junior subordinated debentures. See "DESCRIPTION OF DEBT SECURITIES--Terms." Unless otherwise specified in the applicable prospectus supplement, we will covenant, as to each series of corresponding junior subordinated debentures: . to maintain, directly or indirectly, 100% ownership of the common securities of the WEC Trust to which the corresponding junior subordinated debentures have been issued (provided that certain successors which are permitted pursuant to the indenture may succeed to our ownership of the common securities); 12 . not to voluntarily dissolve, wind-up or liquidate any WEC Trust, except: --in connection with a distribution of the junior subordinated debentures to the holders of the preferred securities in liquidation of the WEC Trust; or --in connection with certain mergers, consolidations or amalgamations permitted by the related trust agreement; and . to use our reasonable efforts, consistent with the terms and provisions of the related trust agreement, to cause such WEC Trust to remain classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes. For additional covenants relating to payment of expenses of the WEC Trusts, see "DESCRIPTION OF PREFERRED SECURITIES--Payment of Expenses." Option to Extend Interest Payment Date. Unless otherwise stated in the applicable prospectus supplement, we will have the right at any time and from time to time during the term of any series of corresponding junior subordinated debentures to defer payments of interest for a specified number of consecutive interest payment, or extension, periods. No extension period may extend beyond the maturity date of that series of corresponding junior subordinated debentures. We may pay at any time all or any portion of the interest accrued to that point during a deferral period. At the end of the deferral period or at a redemption date, we will be obligated to pay all interest accrued and unpaid (together with interest on the unpaid interest to the extent permitted by applicable law.) United States federal income tax consequences and special considerations applicable to any corresponding junior subordinated debentures for which an extension period has been elected will be described in the applicable prospectus supplement. During any extension period, or while we are in default, we will be restricted in our ability to make payments or incur obligations related to our capital stock or debt securities ranking equal to or below the junior subordinated debentures. Prior to the termination of any extension period, we may further extend the interest payment period. However, the deferral period, together with all prior and further extensions, may not exceed 20 consecutive quarters or extend beyond the maturity date of the junior subordinated debentures. After the termination of any deferral period and the payment of all amounts due, we may decide to begin a new deferral period, subject to the above requirements. If the property trustee is the sole holder of the series of junior subordinated debentures held by the WEC Trust, we will give the administrative trustee and the property trustee notice of our selection of any deferral period one business day prior to the earlier of: . the next date distributions on the preferred securities are payable; or . the date the WEC Trust is required to give notice to the New York Stock Exchange (or other applicable self-regulatory organization) or to holders of the preferred securities of the record date or the date any distribution is payable. If the property trustee is not the sole holder of the series of junior subordinated debentures, we will give the debenture holders notice of our selection of any deferral period ten business days prior to the earliest of: . the next interest payment date; or . the date upon which we are required to give notice to the New York Stock Exchange (or other applicable self-regulatory organization) or to holders of the junior subordinated debentures of the record or payment date of any related interest payment. Redemption. The junior subordinated debentures and the applicable securities resolution will provide the terms upon which we can redeem the junior subordinated debentures at our option, and will specify a date prior to which we will not be allowed to redeem the junior subordinated debentures, and after which we will have the right to redeem the junior subordinated debentures, in whole or in part, upon not less than 30 days nor more than 60 days notice to the holder of the junior subordinated debentures at a redemption price or prices stated in the applicable prospectus supplement. 13 If the junior subordinated debentures are redeemed only in part, they will be redeemed pro rata or by lot or by any other method selected by the trustee. If a partial redemption of the corresponding junior subordinated debentures would result in delisting of the preferred securities issued by the WEC Trust from any national securities exchange or other self-regulatory organization on which the preferred securities are then listed, we will not be permitted to effect a partial redemption and may only redeem the corresponding junior subordinated debentures as a whole. Except as otherwise specified in the applicable prospectus supplement and subject to the provisions of the applicable securities resolution, if a Tax Event (as defined below) or an Investment Company Event (as defined below) in respect of a WEC Trust occurs and is continuing, we have the option to redeem the corresponding junior subordinated debentures held by the WEC Trust, in whole but not in part, at any time within 90 days thereafter. If the applicable WEC Trust is the holder of all outstanding corresponding junior subordinated debentures, the proceeds of the redemption will be used by the WEC Trust to redeem the corresponding preferred securities and common securities in accordance with their terms. "Tax Event" means that the applicable WEC Trust will have received an opinion of counsel (which may be counsel to us or an affiliate) experienced in such matters to the effect that, as a result of any . amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority, or . official administrative written decision, pronouncement or action or judicial decision interpreting or applying such laws or regulations, in each case which amendment or change is effective or which proposed change, pronouncement, action or decision is announced on or after the date of issuance of the applicable series of junior subordinated debentures pursuant to the applicable securities resolution, there is more than an insubstantial risk that: . the WEC Trust is, or will be within 90 days of the date of the opinion of counsel, subject to United States Federal income tax with respect to income received or accrued on the junior subordinated debentures; . interest we pay on the corresponding junior subordinated debentures is not, or will not be within 90 days of the date of the opinion of counsel, deductible, in whole or in part, for United States Federal income tax purposes; or . the WEC Trust is, or will be within 90 days of the date of the opinion of counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Investment Company Event" means that the applicable WEC Trust will have received an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority on or after the date of original issuance of the preferred securities by the WEC Trust, the WEC Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended. Restrictions on Certain Payments. Unless otherwise provided in the applicable prospectus supplement, we will promise, as to each series of junior subordinated debentures issued to a WEC Trust, that we and our subsidiaries will not: . declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of our capital stock, or . make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any of our debt securities (including other junior subordinated debentures) that rank equally with or junior in interest to the junior subordinated debentures, or 14 . make any guarantee payments with respect to any of the debt securities of any of our subsidiaries if the guarantee ranks equally with or junior in interest to the junior subordinated debentures other than: . dividends or distributions payable in our common stock; . redemptions or purchases of any rights pursuant to our shareholder rights plan, if any, or any successor rights agreement, and the declaration of a dividend of rights or the issuance of stock under a rights agreement in the future; . payments under any guarantee relating to the preferred securities of a WEC Trust; . purchases of common stock related to the issuance of common stock under any benefit plans for our directors, officers or employees; . obligations under any dividend reinvestment plan or stock purchase plan; and . purchases of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of a security being converted or exchanged for our capital stock. These restriction apply only if: . at that time we have actual knowledge that an event has occurred that (a) with the giving of notice or the lapse of time, or both, would constitute an event of default under the indenture with respect to the junior subordinated debentures of that series and (b) we shall not have taken reasonable steps to cure the event, or . the corresponding junior subordinated debentures are held by a WEC Trust which is the issuer of a series of related preferred securities, and we are in default with respect to payment of any obligations under the guarantee relating to those preferred securities, or . we shall have given notice of our selection of a deferral of interest extension period as provided pursuant to the securities resolution with respect to the corresponding junior subordinated debentures and shall not have rescinded the notice, or the extension period shall be continuing. Regarding the Trustee The First National Bank of Chicago will act as trustee and registrar for debt securities issued under the indenture and, unless otherwise indicated in a prospectus supplement, the trustee will also act as transfer agent and paying agent with respect to the debt securities. (Section 2.03) We may remove the trustee with or without cause if we notify the trustee three months in advance and if no default occurs during the three-month period. (Section 7.07) The trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for us or our affiliates, and may otherwise deal with us or our affiliates, as if it were not the trustee. The First National Bank of Chicago is a participating lender with respect to our existing credit agreements for our commercial paper program ($15 million) and is a lender and administrative agent for a $75 million credit arrangement for Wisconsin Electric, one of our subsidiaries. One of our directors is also a director of the bank and of the bank holding company. DESCRIPTION OF PREFERRED SECURITIES The following section describes the general terms and provisions of the preferred securities to which any prospectus supplement may relate. The particular terms of the preferred securities offered by any WEC Trust and the extent to which any of these general provisions do not apply to its preferred securities will be described in the prospectus supplement relating to that WEC Trust and its preferred securities. 15 Pursuant to the terms of the trust agreement for each WEC Trust, the administrative trustees are authorized to issue the preferred securities and the common securities on behalf of the WEC Trust. The preferred securities will represent beneficial ownership interests in the assets of the WEC Trust. The holders of the preferred securities will be entitled to a preference over holders of the common securities of the WEC Trust in certain circumstances with respect to distributions and amounts payable on redemption or liquidation. Holders of preferred securities will also have certain other benefits as described in the corresponding trust agreement. We have summarized selected provisions of the preferred securities and each trust agreement below. This summary is not complete. The form of trust agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part. You should read the form of trust agreement for provisions that may be important to you. You should also consider applicable provisions of the Trust Indenture Act. Each of the WEC Trusts is a legally separate entity, and the assets of one are not available to satisfy the obligations of the other. General The preferred securities of a WEC Trust will rank equally, and payments on the preferred securities will be made pro rata, with the common securities of that WEC Trust except as described under "--Subordination of Common Securities." Legal title to the corresponding junior subordinated debentures will be held by the property trustee in trust for the benefit of the holders of the related preferred securities and for us as holder of the common securities. Each guarantee agreement we execute for the benefit of the holders of a WEC Trust's preferred securities will be a guarantee on a junior subordinated basis with respect to the related preferred securities but will not guarantee payment of distributions or amounts payable on redemption or liquidation of the preferred securities when the related WEC Trust does not have funds available to make such payments. See "DESCRIPTION OF GUARANTEES." Distributions Distributions on the preferred securities will be cumulative, will accumulate from the date of original issuance and will be payable on the dates specified in the applicable prospectus supplement. Except as specified in the applicable prospectus supplement, in the event that any date on which distributions are payable on the preferred securities is not a business day, payment of the distribution will be made on the next succeeding day that is a business day (without any interest or other payment in respect to the delay), with the same force and effect as if made on the originally specified date. However, if the next business day is in the next calendar year, payment of distributions will be made on the preceding business day. Each date on which distributions are payable is referred to in this prospectus as a distribution date. A WEC Trust's preferred securities represent beneficial ownership interests in the assets of that WEC Trust. The distributions on each preferred security will be payable at a rate specified in the prospectus supplement for that preferred security. The amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months unless otherwise specified in the applicable prospectus supplement. Distributions to which holders of preferred securities are entitled will accumulate additional distributions at the rate per annum specified in the applicable prospectus supplement. Distributions on preferred securities as used in this prospectus includes any additional distributions unless otherwise stated. The revenue of each WEC Trust available for distribution to holders of its preferred securities will be limited to payments under the corresponding junior subordinated debentures it owns. Each WEC Trust will invest the proceeds from the issuance and sale of its trust securities in the corresponding junior subordinated debentures, and it will have no other assets. See "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts." If we do not make interest payments on the corresponding junior subordinated debentures, the property trustee will not have funds available to pay distributions on the related preferred securities. We have guaranteed the payment of distributions (if and to the extent the WEC Trust has funds legally available for the payment of distributions and cash sufficient to make the payments) on a limited basis as set forth herein under "DESCRIPTION OF GUARANTEES." 16 Distributions on the preferred securities will be payable to the holders as they appear on the register of the WEC Trust on the relevant record dates, which, as long as the preferred securities remain in book-entry form, will be one business day prior to the relevant distribution date. Subject to any applicable laws and regulations and to the provisions of the applicable trust agreement, each distribution payment will be made as described under "BOOK- ENTRY ISSUANCE." In the event any preferred securities are not in book-entry form, the relevant record date for such preferred securities shall be a date at least 15 days prior to the relevant distribution date, as specified in the applicable prospectus supplement. Payment of Expenses Pursuant to the indenture, we have agreed to pay all debts and obligations (other than distributions on the trust securities) and all costs and expenses of the WEC Trusts and to pay any and all taxes, duties, assessments or other governmental charges (other than United States withholding taxes) imposed by the United States or any other taxing authority. This includes, but is not limited to, all costs and expenses relating to the organization of the WEC Trusts, the fees and expenses of the property trustee, the Delaware trustee and the administrative trustees and all costs and expenses relating to the operation of the WEC Trusts. As a result, the net amounts received and retained by a WEC Trust after paying these fees, expenses, debts and obligations will be equal to the amounts the WEC Trust would have received and retained had no fees, expenses, debts and obligations been incurred by or imposed on it. Our promise to pay these obligations is for the benefit of, and shall be enforceable by, any creditor to whom the fees, expenses, debts and obligations are owed, whether or not the creditor has received notice of the promise. Any creditor may enforce these obligations directly against us, and we have agreed to irrevocably waive any right or remedy that would otherwise require that any creditor take any action against the WEC Trust or any other person before proceeding against us. We will execute such additional agreements as may be necessary to give full effect to these promises. Redemption or Exchange If we repay or redeem, in whole or in part, any junior subordinated debentures that have been issued to a WEC Trust, whether at maturity or earlier, the proceeds from the repayment or redemption shall be applied by the property trustee to redeem a like amount of the trust securities. The property trustee will give not less than 30 nor more than 60 days notice, and the redemption price will be equal to the sum of: . the aggregate liquidation amount of the trust securities being redeemed; plus . accumulated but unpaid distributions on to the redeemed trust securities to the date of redemption; plus . the related amount of the premium, if any, that we pay upon the concurrent redemption of corresponding junior subordinated debentures. See "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts--Redemption." If we are repaying or redeeming less than all of any series of junior subordinated debentures on a redemption date, then the proceeds from the repayment or redemption shall be allocated to redeem the related trust securities pro rata. The amount of premium, if any, that we pay to redeem all or any part of any series of any corresponding junior subordinated debentures will also be allocated to the redemption pro rata of the related trust securities. We will have the right to redeem any series of junior subordinated debentures: . subject to the conditions described under "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts--Redemption"; or . as may be otherwise specified in the applicable prospectus supplement. 17 We have the right to dissolve a WEC Trust at any time and, after satisfaction of any liabilities to creditors of the WEC Trust as provided by applicable law, to cause the corresponding junior subordinated debentures owned by the WEC Trust to be distributed to the holders of the related preferred securities and common securities in liquidation of the WEC Trust. If provided in the applicable prospectus supplement, we will have the right to extend or shorten the maturity of any series of junior subordinated debentures at the time that we exercise our right to elect to dissolve the related WEC Trust and cause the corresponding junior subordinated debentures to be distributed to the holders of the related preferred securities and common securities in liquidation of the WEC Trust. However, we can extend the maturity only if the conditions specified in the applicable prospectus supplement are met at the time the election is made and at the time of the extension. After the liquidation date fixed for any distribution of corresponding junior subordinated debentures to the holders of any series of preferred securities: . that series of preferred securities will no longer be deemed to be outstanding; . The Depository Trust Company (DTC) or its nominee, as the record holder of the preferred securities, will receive a registered global certificate or certificates representing the corresponding junior subordinated debentures to be delivered in the distribution; and . any certificates representing that series of preferred securities not held by DTC or its nominee will be deemed to represent the corresponding junior subordinated debentures having a principal amount equal to the stated liquidation amount of that series of preferred securities, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid distributions on that series of preferred securities until the certificates are presented to the administrative trustees or their agent for transfer or reissuance. We cannot predict the market prices for the preferred securities or the corresponding junior subordinated debentures that may be distributed in exchange for preferred securities. As a result, the preferred securities that an investor may purchase, or the corresponding junior subordinated debentures that an investor may receive on dissolution and liquidation of a WEC Trust, may trade at a lower price than the investor paid to purchase the preferred securities. Redemption and Exchange Procedures Any preferred securities that are redeemed on any redemption date will receive the redemption price from the contemporaneous redemption of the corresponding junior subordinated debentures. Redemptions of the preferred securities will be made and the redemption price will be payable on each redemption date only to the extent that the related WEC Trust has funds on hand available for the payment of such redemption price. See "Subordination of Common Securities." If a WEC Trust gives a notice of redemption in respect of its preferred securities, then, by 12:00 noon, New York City time, on the redemption date, to the extent funds are available, the property trustee will deposit irrevocably with DTC funds sufficient to pay the applicable redemption price and will give DTC irrevocable instructions and authority to pay the redemption price to the holders of such preferred securities. See "BOOK-ENTRY ISSUANCE." If the preferred securities are no longer in book-entry form, the property trustee, to the extent funds are available, will irrevocably deposit with the paying agent for the preferred securities funds sufficient to pay the applicable redemption price and will give the paying agent irrevocable instructions and authority to pay the redemption price to the holders thereof upon surrender of their certificates evidencing the preferred securities. Nevertheless, distributions payable on or prior to the redemption date for any preferred securities called for redemption shall be payable to the holders of such preferred securities on the relevant record dates for the related distribution dates. If notice of redemption shall have been given and funds deposited as required, then 18 upon the date of such deposit, all rights of the holders of the preferred securities called for redemption will cease, except the right of the holders of the preferred securities to receive the redemption price, but without interest on the redemption price, and the preferred securities will cease to be outstanding. Except as specified in the applicable prospectus supplement, in the event that any date fixed for redemption of preferred securities is not a business day, then payment of the redemption price payable on such date will be made on the next succeeding day which is a business day (and without any interest or other payment in respect of any delay). However, if the next business day is in the next calendar year, the redemption price will be payable on the preceding business day. In the event that payment of the redemption price in respect of preferred securities called for redemption is improperly withheld or refused and not paid either by the WEC Trust or by us pursuant to the guarantee as described under "DESCRIPTION OF GUARANTEES," then: . distributions on those preferred securities will continue to accrue at the then applicable rate, from the redemption date originally established by the WEC Trust for those preferred securities to the date the redemption price is actually paid; and . the actual payment date will be the date fixed for redemption for purposes of calculating the redemption price. Subject to applicable law (including, without limitation, United States federal securities law), we or our subsidiaries may at any time and from time to time purchase outstanding preferred securities by tender, in the open market or by private agreement. Payment of the redemption price on the preferred securities and any distribution of corresponding junior subordinated debentures to holders of preferred securities will be made to the applicable record holders thereof as they appear on the register for the preferred securities on the relevant record date. Except as provided in the next sentence, the record date will be one business day prior to the relevant redemption date or liquidation date, as applicable. However, if any preferred securities are not in book-entry form, the relevant record date for those preferred securities shall be a date at least 15 days prior to the redemption date or liquidation date, as applicable, as specified in the applicable prospectus supplement. If less than all of the preferred securities and common securities issued by a WEC Trust are to be redeemed on a redemption date, then the aggregate liquidation amount of preferred securities and common securities to be redeemed shall be allocated pro rata to the preferred securities and the common securities based upon the relative liquidation amounts of the two classes. The particular preferred securities to be redeemed shall be selected on a pro rata basis not more than 60 days prior to the redemption date by the property trustee from the outstanding preferred securities not previously called for redemption. The property trustee shall promptly notify the trust registrar in writing of the preferred securities selected for redemption and, in the case of any preferred securities selected for partial redemption, the liquidation amount to be redeemed. For all purposes of each trust agreement, unless the context otherwise requires, all provisions relating to the redemption of preferred securities shall relate, in the case of any preferred securities redeemed or to be redeemed only in part, to the portion of the aggregate liquidation amount of preferred securities which has been or is to be redeemed. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of trust securities to be redeemed at the holder's registered address. Unless we default in payment of the redemption price on the corresponding junior subordinated debentures, on and after the redemption date interest ceases to accrue on the corresponding junior subordinated debentures or portions thereof (and distributions cease to accrue on the related preferred securities or portions thereof) called for redemption. 19 Subordination of Common Securities Payment of distributions on, and the redemption price of, each WEC Trust's preferred securities and common securities, as applicable, generally shall be made pro rata based on the liquidation amount of the preferred securities and of the common securities. However, if on any distribution date or redemption date an event of default with respect to any corresponding junior subordinated debenture shall have occurred and be continuing, then: . neither we nor the WEC Trust shall pay any distribution on, or redemption price of, any of the WEC Trust's common securities, and neither we nor the WEC Trust shall make any other payment on account of the redemption, liquidation or other acquisition of such common securities, unless --all accumulated and unpaid distributions on all of the WEC Trust's outstanding preferred securities are paid in cash for all distribution periods terminating on or prior to any payment on the common securities, and --in the case of a payment of the redemption price, the full amount of the redemption price on all of the WEC Trust's outstanding preferred securities then called for redemption shall have been paid or provided for; and . all funds available to the property trustee shall first be applied to the payment in full in cash of all distributions on, or redemption price of, the WEC Trust's preferred securities then due and payable. In the case of any event of default with respect to any corresponding junior subordinated debentures, we (as holder of the WEC Trust's common securities) will be deemed to have waived any right to act with respect to the event of default under the applicable trust agreement until the effect of all events of default with respect to such preferred securities has been cured, waived or otherwise eliminated. Until any events of default under the applicable trust agreement with respect to the preferred securities have been cured, waived or otherwise eliminated, the property trustee is required to act solely on behalf of the holders of the preferred securities and not on our behalf as holder of the WEC Trust's common securities, and only the holders of such preferred securities will have the right to direct the property trustee to act on their behalf. Liquidation Distribution upon Dissolution Pursuant to each trust agreement, each WEC Trust shall automatically dissolve upon expiration of its term and shall dissolve on the first to occur of: . specified events relating to our bankruptcy, dissolution or liquidation; . our written direction to the property trustee, as depositor, to dissolve the WEC Trust and distribute the corresponding junior subordinated debentures to the holders of the preferred securities in exchange for the preferred securities (which direction is optional and wholly within our discretion as depositor); . the redemption of all of the WEC Trust's trust securities; and . the entry of an order for the dissolution of the WEC Trust by a court of competent jurisdiction. If an early dissolution occurs in any manner except by the redemption of all of the trust securities, then the WEC Trust will be liquidated by the issuer trustees as expeditiously as the issuer trustees determine to be possible. Except as provided in the next sentence, the issuer trustees shall distribute (after satisfaction of any liabilities to creditors of such WEC Trust as provided by applicable law) to the holders of such trust securities a like amount of the corresponding junior subordinated debentures. However, if such a distribution is determined by the property trustee not to be practical, the holders of the trust securities will be entitled to receive out of the assets of the WEC Trust available for distribution to holders (after satisfaction of any liabilities to creditors of the WEC Trust as provided by applicable law) a liquidation distribution in an amount equal to, in the case of holders of preferred securities, the aggregate of the liquidation amount plus accrued and unpaid distributions 20 thereon to the date of payment. If the liquidation distribution can be paid only in part because the WEC Trust has insufficient assets available to pay in full the aggregate liquidation distribution, then the amounts payable directly by the WEC Trust on its preferred securities will be paid on a pro rata basis. As the holder of the WEC Trust's common securities, we will be entitled to receive distributions upon any liquidation pro rata with the holders of its preferred securities. However, if an event of default relating to the corresponding junior subordinated debentures has occurred and is continuing, the preferred securities will have a priority over the common securities. Events of Default; Notice Any one of the following events constitutes a trust "event of default" under each trust agreement with respect to the preferred securities issued thereunder (whatever the reason for the trust event of default): . the occurrence of an event of default with respect to a corresponding series of junior subordinated debentures issued under the indenture to the trust (see "DESCRIPTION OF DEBT SECURITIES--Defaults and Remedies"); or . default by the property trustee in the payment of any distribution when it becomes due and payable, and continuation of the default for a period of 60 days; or . default by the property trustee in the payment of any redemption price of any trust security when it becomes due and payable; or . default in the performance, or breach, in any material respect, of any covenant or warranty of the issuer trustees in the trust agreement (other than a default in the payment of any distribution or any redemption price as provided above), and continuation of that default or breach for a period of 90 days after there has been given, by registered or certified mail, to the defaulting issuer trustee or trustees by the holders of at least 25% in aggregate liquidation preference of the outstanding preferred securities of the applicable WEC Trust, a written notice specifying the default or breach and requiring it to be remedied and stating that the notice is a "notice of default" under the trust agreement; or . the occurrence of specified events of bankruptcy or insolvency with respect to the property trustee and our failure to appoint a successor property trustee within 60 days. Within 90 days after the occurrence of any trust event of default actually known to the property trustee, the property trustee is required to transmit notice of the trust event of default to the holders of the WEC Trust's preferred securities, to the administrative trustees and to us, as depositor, unless the trust event of default shall have been cured or waived. We and the administrative trustees are required to file annually with the property trustee a certificate as to whether or not we each are in compliance with all the conditions and covenants applicable to us under each trust agreement. If an event of default with respect to a corresponding junior subordinated debenture has occurred and is continuing, the preferred securities shall have a preference over the common securities upon termination of the WEC Trust as described above. See "Liquidation Distribution upon Dissolution." The existence of a trust event of default does not entitle the holders of preferred securities to cause the redemption of the preferred securities. Removal of Issuer Trustees We as the holder of the common securities may remove an administrative trustee at any time. Unless an event of default with respect to a corresponding junior subordinated debenture shall have occurred and be continuing, we as the holder of the common securities may also remove the property trustee or the Delaware trustee at any time. If a trust event of default resulting from an event of default with respect to a corresponding junior subordinated debenture has occurred and is continuing, the property trustee and the Delaware trustee 21 may be removed at such time by the holders of a majority in liquidation amount of the outstanding preferred securities. In no event will the holders of the preferred securities have the right to vote to appoint, remove or replace the administrative trustees: that right belongs exclusively to us as the holder of the common securities. No resignation or removal of an issuer trustee and no appointment of a successor trustee will be effective until the successor trustee accepts its appointment in accordance with the provisions of the applicable trust agreement. Co-trustees and Separate Property Trustee Unless a trust event of default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the trust property may at the time be located, we (as the holder of the common securities) and the administrative trustees shall have power to appoint one or more persons either to act as a co-trustee, jointly with the property trustee, of all or any part of the trust property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such person or persons in such capacity any property, title, right or power deemed necessary or desirable, subject to the provisions of the applicable trust agreement. In case an event of default with respect to a corresponding junior subordinated debenture has occurred and is continuing, the property trustee alone will have power to make such an appointment. Merger or Consolidation of Issuer Trustees Any corporation into which the property trustee, the Delaware trustee or any administrative trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of such trustee, shall be the successor of such trustee under each trust agreement, provided such corporation shall be otherwise qualified and eligible. Mergers, Consolidations, Conversions, Amalgamations or Replacements of the WEC Trusts A WEC Trust may not merge with or into, consolidate, convert into, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other person, except as described below, as described in "Liquidation Distribution upon Dissolution" or as described in the prospectus supplement with respect to the preferred securities. A WEC Trust may, at our request, with the consent of the administrative trustees and without the consent of the property trustee, the Delaware trustee or the holders of the preferred securities, merge with or into, consolidate, convert into, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, that: . the successor entity either (a) expressly assumes all of the obligations of the WEC Trust with respect to the preferred securities or (b) substitutes for the preferred securities other successor securities having substantially the same terms as the preferred securities so long as the successor securities rank the same as the preferred securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise; . we expressly appoint a trustee of such successor entity possessing the same powers and duties as the property trustee as the holder of the corresponding junior subordinated debentures; . the successor securities are listed, or any successor securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the preferred securities are then listed, if any; 22 . the merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease does not cause the preferred securities (including any successor securities) to be downgraded by a nationally recognized statistical rating organization; . the merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the preferred securities (including any successor securities) in any material respect; . the successor entity has a purpose substantially similar to that of the WEC Trust; . prior to the merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease, we have received an opinion from independent counsel to the WEC Trust experienced in such matters to the effect that --the merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the preferred securities (including any successor securities) in any material respect, and --following the merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease, neither the WEC Trust nor such successor entity will be required to register as an investment company under the Investment Company Act; and . we or any permitted successor or assignee owns all of the common securities of the successor entity and guarantees the obligations of the successor entity under the successor securities at least to the extent provided by the guarantee. Notwithstanding the general provisions described above, a WEC Trust shall not, except with the consent of holders of 100% in liquidation amount of the preferred securities, merge with or into, consolidate, convert into, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such merger, consolidation, conversion, amalgamation, replacement, conveyance, transfer or lease would cause the WEC Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. Voting Rights; Amendment of Each Trust Agreement The holders of the preferred securities will have only the voting rights described below and under "DESCRIPTION OF GUARANTEES--Amendments and Assignment," plus any voting rights required by law. Each trust agreement may be amended from time to time by us, the property trustee and the administrative trustees, without the consent of the holders of the preferred securities: . to cure any ambiguity, correct or supplement any provisions in the trust agreement that may be inconsistent with any other provision, or to address matters or questions arising under the trust agreement in a way which is consistent with the other provisions of the trust agreement; or . to modify, eliminate or add to any provisions of the trust agreement if necessary to ensure that the WEC Trust will be classified for United States federal income tax purposes as a grantor trust or to ensure that the WEC Trust will not be required to register as an "investment company" under the Investment Company Act. However, in the case of the first clause, the action must not adversely affect in any material respect the interests of any holder of trust securities. Any amendment of the trust agreement becomes effective when we give notice of the amendment to the holders of the trust securities. 23 Each trust agreement may be amended by us and the issuer trustees with: . the consent of holders representing not less than a majority (based upon liquidation amounts) of the outstanding trust securities; and . receipt by the issuer trustees of an opinion of counsel experienced in such matters to the effect that the amendment or the exercise of any power granted to the issuer trustees in accordance with the amendment will not affect the WEC Trust's status as a grantor trust for United States federal income tax purposes or the WEC Trust's exemption from status as an "investment company" under the Investment Company Act. However, without the consent of each holder of trust securities, no amendment may: . change the amount or timing of any distribution on the trust securities or otherwise adversely affect the amount of any distribution required to be made in respect of the trust securities as of a specified date; or . restrict the right of a holder of trust securities to sue for the enforcement of any distribution payment. The property trustee is required to notify each holder of preferred securities whenever the property trustee is notified of a default with respect to the corresponding junior subordinated debentures. Furthermore, so long as any junior subordinated debentures are held by the property trustee, the issuer trustees are not permitted to: . direct the time, method and place of conducting any proceeding for any remedy available to the trustee under the indenture, or execute any trust or power conferred on the property trustee with respect to the corresponding junior subordinated debentures; . waive any past default that is waivable under the indenture governing the junior subordinated debentures; . exercise any right to rescind or annul a declaration that the principal of all the corresponding junior subordinated debentures shall be due and payable; or . give a required consent to any amendment, modification or termination of the indenture, the applicable securities resolution or the corresponding junior subordinated debentures unless, in each case, they first obtain the approval of the holders of a majority in aggregate liquidation amount of all outstanding preferred securities. However, where the indenture requires the consent of each affected holder of corresponding junior subordinated debentures, the property trustee cannot give the consent without first obtaining the consent of each holder of the related preferred securities. The issuer trustees cannot revoke any action previously authorized or approved by a vote of the holders of the preferred securities except by subsequent vote of the holders of the preferred securities. In addition to obtaining approval of the holders of the preferred securities as described above, the issuer trustees are required to obtain an opinion of counsel to the effect that the proposed action will not cause the WEC Trust to be classified as a corporation for United States federal income tax purposes. Any required approval of holders of preferred securities may be given either at a meeting of holders of preferred securities or pursuant to a written consent. The property trustee must notify record holders of preferred securities of any meeting in the manner set forth in each trust agreement. No vote or consent of the holders of preferred securities will be required for a WEC Trust to redeem and cancel its preferred securities in accordance with the applicable trust agreement. Whenever holders of preferred securities are entitled to vote or consent under any of the circumstances described above, neither we nor the issuer trustees will be permitted to vote. For purposes of any vote or consent, any of the preferred securities that we own (or that are owned by the issuer trustees or our affiliates) will be treated as if they were not outstanding. 24 Payment and Paying Agency The depositary for the preferred securities will make payments in respect of the preferred securities by crediting the relevant accounts at the depositary on the applicable distribution dates. If any WEC Trust's preferred securities are not held by the depositary, then the paying agent will mail checks to registered holders of the preferred securities as their addresses appear on its Register. Unless otherwise specified in the applicable prospectus supplement, the paying agent shall initially be the property trustee and any co-paying agent chosen by the property trustee and acceptable to the administrative trustees and to us. The paying agent can resign upon 30 days' written notice to the property trustee and to us. If the property trustee resigns as paying agent, the administrative trustees will appoint a bank or trust company acceptable to the administrative trustees and to us to act as paying agent. Registrar and Transfer Agent Unless otherwise specified in the applicable prospectus supplement, the property trustee will act as registrar and transfer agent for the preferred securities. Each WEC Trust will register transfers of preferred securities without charge, but will require payment of any tax or other governmental charges that may be imposed in connection with any transfer or exchange. The WEC Trusts will not register transfers of their preferred securities after the relevant preferred securities are called for redemption. Information Concerning the Property Trustee The property trustee undertakes to perform only the duties that are specifically set forth in each trust agreement, other than during the continuance of a trust event of default. After a trust event of default, the property trustee is required to exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the property trustee has no obligation to exercise any of its powers under the applicable trust agreement at the request of any holder of preferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that it might incur by doing so. If no trust event of default has occurred and is continuing and the property trustee is required to decide between alternative courses of action, construe ambiguous provisions in the applicable trust agreement or is unsure of the application of any provision of the applicable trust agreement, then we will have the right to tell the property trustee which action to take unless the matter is one on which holders of preferred securities are entitled to vote. If we don't give any directions, the property trustee will take whatever action it deems advisable and in the best interests of the holders of the trust securities. The property trustee will have no liability except for its own bad faith, negligence or willful misconduct. Miscellaneous The administrative trustees are authorized and directed to operate the WEC Trusts in such a way that: . no WEC Trust will be: --deemed to be an "investment company" required to be registered under the Investment Company Act; or --classified as an association taxable as a corporation for United States federal income tax purposes; and . the corresponding junior subordinated debentures will be treated as our indebtedness for United States federal income tax purposes. We and the administrative trustees are authorized to take any lawful action (consistent with the certificate of trust of each WEC Trust and each trust agreement) that we and the administrative trustees determine in our discretion to be necessary or desirable for these purposes, as long as the action does not materially and adversely affect the interests of the holders of the related preferred securities. 25 Holders of the preferred securities have no preemptive or similar rights. Neither WEC Trust may borrow money or issue debt or mortgage or pledge any of its assets. DESCRIPTION OF GUARANTEES When the trust securities are issued, we will execute and deliver a guarantee agreement for the benefit of the holders of the preferred securities. The guarantee agreement will be qualified as an indenture under the Trust Indenture Act. The First National Bank of Chicago will act as guarantee trustee under each guarantee for the purposes of compliance with the Trust Indenture Act, and will hold the guarantee for the benefit of the holders of the related WEC Trust's preferred securities. We have summarized certain provisions of the guarantees below. This summary is not complete. The form of the guarantee agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part, and you should read the guarantee agreement for provisions that may be important to you. Reference in this summary to preferred securities means that WEC Trust's preferred securities to which a guarantee relates. General We will promise to pay the guarantee payments to the holders of the preferred securities, as and when due, regardless of any defense, right of set- off or counterclaim that the WEC Trust may have or assert other than the defense of payment. The guarantee payments will rank equal to the corresponding junior subordinated debentures and will be junior and subordinated to our senior debt and subordinated debt. The guarantee payments include the following, to the extent not paid by or on behalf of the related WEC Trust: . any accumulated and unpaid distributions required to be paid on the preferred securities, but only if and to the extent that the applicable WEC Trust has funds on hand available for the distributions at that time; . the redemption price with respect to any preferred securities called for redemption, if and to the extent that the applicable WEC Trust has funds on hand available to pay the redemption price at that time; or . upon a voluntary or involuntary dissolution, winding up or liquidation of a WEC Trust (unless the corresponding junior subordinated debentures are distributed to the holders of the preferred securities), the lesser of: --the liquidation distribution; and --the amount of assets of the applicable WEC Trust remaining available for distribution to holders of preferred securities. Our obligation to make a guarantee payment may be satisfied either by our direct payment of the required amounts to the holders of the applicable preferred securities or by causing the WEC Trust to pay them. Each guarantee will be an irrevocable guarantee on a junior subordinated basis of the related WEC Trust's obligations under the preferred securities, but will apply only to the extent that the related WEC Trust has funds sufficient to make the required payments. The guarantee is a guarantee of payment, not a guarantee of collection. If we do not make interest payments on the corresponding junior subordinated debentures held by a WEC Trust, the WEC Trust will not be able to pay distributions on the preferred securities. Each guarantee will rank subordinate and junior in right of payment to all of our senior indebtedness and subordinated indebtedness. See "Status of the Guarantees." Also, all of our consolidated operating assets are owned by our subsidiaries, and most are owned by regulated utilities. Various financing arrangements and regulatory requirements impose 26 restrictions on the ability of our utility subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. Under Wisconsin law, Wisconsin Electric is prohibited from loaning funds, either directly or indirectly, to us. We rely on funds obtained from our subsidiaries to meet our obligations for payment of principal and interest on our outstanding debt obligations and corporate expenses. Accordingly, our obligations under the guarantees will be effectively subordinated to all existing and future liabilities of our subsidiaries and could be affected by regulatory limitations. See "DESCRIPTION OF DEBT SECURITIES--General" and "Ranking of Debt Securities." Except as otherwise provided in the applicable prospectus supplement, we and our subsidiaries are not limited in the amount of secured or unsecured debt that we may have outstanding. See the prospectus supplement relating to any offering of preferred securities. We have also agreed to guarantee the obligations of the WEC Trusts with respect to the common securities to the same extent as the guarantee to holders of the preferred securities. However, if there is an event of default with respect to a corresponding junior subordinated debenture, holders of preferred securities will have priority over holders of common securities. Our obligations described herein and in any accompanying prospectus supplement, through the applicable guarantee agreement, the applicable trust agreement, the corresponding junior subordinated debentures, and the applicable securities resolution under the indenture, taken together, constitute our full, irrevocable and unconditional guarantee of payments due on the preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes the guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the WEC Trust's obligations under the preferred securities. See "THE WEC TRUSTS," "DESCRIPTION OF PREFERRED SECURITIES," and "DESCRIPTION OF DEBT SECURITIES--Certain Provisions Relating to Junior Subordinated Debentures Issued to the WEC Trusts." Status of the Guarantees Each guarantee will constitute our unsecured obligation and will rank subordinate and junior in right of payment to all of our senior debt and subordinated debt. Each guarantee will rank equally with all other guarantees we issue relating to preferred securities issued by the WEC Trusts. Each guarantee will constitute a guarantee of payment and not of collection (i.e., the guaranteed party may institute a legal proceeding directly against us as the guarantor to enforce its rights under the guarantee without first suing anyone else). Each guarantee will be held for the benefit of the holders of the related preferred securities. Each guarantee will be discharged only by payment of the guarantee payments in full (to the extent not paid by the WEC Trust) or by distribution of the corresponding junior subordinated debentures to the holders of the preferred securities. None of the guarantees places a limitation on the amount of additional senior indebtedness or subordinated indebtedness that we may incur. We expect from time to time to incur additional indebtedness constituting senior indebtedness or subordinated indebtedness. Amendments and Assignment Except with respect to any changes which do not adversely affect the rights of holders of the related preferred securities in any material respect (in which case no vote will be required), no guarantee may be amended without the prior approval of the holders of not less than a majority of the aggregate liquidation amount of the related outstanding preferred securities. The manner of obtaining any required approval will be as set forth under "DESCRIPTION OF PREFERRED SECURITIES--Voting Rights; Amendment of Each Trust Agreement." All guarantees and agreements contained in each guarantee agreement will bind our successors, assigns, receivers, trustees and representatives and will benefit the holders of the related preferred securities then outstanding. Events of Default We will be in default under any guarantee agreement if (a) we don't make required payments or (b) we are notified that we haven't performed some other obligation and have not cured that failure within 90 days. 27 The holders of a majority in aggregate liquidation amount of the related preferred securities have the right: . to direct the time, method and place of conducting any proceeding for any remedy available to the guarantee trustee in respect of the guarantee agreement; or . to direct the exercise of any power conferred upon the guarantee trustee under the guarantee agreement. Holders of a majority in aggregate liquidation amount of the related preferred securities also have the right to waive any past event of default and its consequences. Any holder of the preferred securities may institute a legal proceeding directly against us to enforce the WEC Trust's rights under the guarantee agreement without first instituting a legal proceeding against the WEC Trust, the guarantee trustee or anyone else. As guarantor, we are required to file annually with the guarantee trustee a certificate stating whether or not we are in compliance with all the conditions and covenants applicable to us under the guarantee agreement. Information Concerning the Guarantee Trustee The guarantee trustee promises to perform only the duties that are specifically set forth in each guarantee agreement, other than during the occurrence and continuance of a default by us in performance of any guarantee. After we default and while the default continues, the guarantee trustee must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the guarantee trustee is under no obligation to exercise any of the powers vested in it by any guarantee agreement at the request of any holder of any preferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that it might incur by doing so. Termination of the Guarantees Each guarantee will terminate upon full payment of the redemption price of the related preferred securities, upon full payment of the amounts payable upon liquidation of the related WEC Trust or upon distribution of corresponding junior subordinated debentures to the holders of the related preferred securities. Each guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of the related preferred securities must restore payment of any sums paid under the preferred securities or the guarantee. Governing Law Each guarantee agreement will be governed by and construed in accordance with the laws of the State of New York. RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEES Full and Unconditional Guarantee We irrevocably guarantee payments of distributions and other amounts due on the preferred securities (to the extent the applicable WEC Trust has funds available for the payment of the distributions) as and to the extent set forth under "DESCRIPTION OF GUARANTEES." Taken together, our obligations under each series of corresponding junior subordinated debentures, the related securities resolution, the indenture, the related trust agreement and the related guarantee agreement provide, in the aggregate, a full, irrevocable and unconditional guarantee of payments of distributions and other amounts due on the related series of preferred 28 securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes the full guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the WEC Trust's obligations under the preferred securities. If and to the extent that we do not make payments on any series of corresponding junior subordinated debentures, the WEC Trust will not pay distributions or other amounts due on its preferred securities. The guarantees do not cover payment of distributions when the related WEC Trust does not have sufficient funds to pay the distributions. In that event, the remedy for a holder of a series of preferred securities is to institute a legal proceeding directly against us for enforcement of payment of the distributions to such holder. Our obligations under each guarantee are subordinate and junior in right of payment to all of our senior indebtedness and subordinated indebtedness. Sufficiency of Payments As long as all payments are made when due on each series of corresponding junior subordinated debentures, those payments will be sufficient to cover distributions and other payments due on the related preferred securities. This is primarily because: . the aggregate principal amount of each series of corresponding junior subordinated debentures will be equal to the sum of the aggregate stated liquidation amount of the related preferred securities and related common securities; . the interest rate and interest and other payment dates on each series of corresponding junior subordinated debentures will match the distribution rate and distribution and other payment dates for the related preferred securities; . we, as borrower, have promised to pay any and all costs, expenses and liabilities of each WEC Trust except the WEC Trust's obligations under its preferred securities; and . each trust agreement provides that the WEC Trust will not engage in any activity that is not consistent with the limited purposes of the WEC Trust. We have the right to set-off any payment we are otherwise required to make under the indenture if and to the extent we have already made, or are concurrently making, a payment under the related guarantee agreement. Enforcement Rights of Holders of Preferred Securities A holder of any preferred security may institute a legal proceeding directly against us to enforce its rights under the related guarantee agreement without first instituting a legal proceeding against the guarantee trustee, the related WEC Trust or anyone else. Our default or event of default under any other senior or subordinated indebtedness would not necessarily constitute a trust event of default. However, in the event of payment defaults under, or acceleration of, our senior or subordinated indebtedness, the subordination provisions of the applicable securities resolution will provide that no payments may be made in respect of the corresponding junior subordinated debentures until the senior or subordinated indebtedness has been paid in full or any payment default thereunder has been cured or waived. Our failure to make required payments on any series of corresponding junior subordinated debentures would constitute a trust event of default. Limited Purpose of WEC Trusts Each WEC Trust's preferred securities evidence undivided beneficial ownership interests in the assets of that WEC Trust, and each WEC Trust exists for the sole purposes of issuing its preferred securities and 29 common securities, investing the proceeds in corresponding junior subordinated debentures and engaging in only those other activities necessary, convenient or incidental to those purposes. A principal difference between the rights of a holder of a preferred security and a holder of a corresponding junior subordinated debenture is that a holder of a junior subordinated debenture is entitled to receive from us the principal amount of and interest accrued on corresponding junior subordinated debentures held, while a holder of preferred securities is entitled to receive distributions from the WEC Trust (or from us under the applicable guarantee agreement) if and to the extent the WEC Trust has funds available for the payment of the distributions. Rights Upon Dissolution Upon any voluntary or involuntary dissolution of any WEC Trust involving the liquidation of the corresponding junior subordinated debentures, the holders of the related preferred securities will be entitled to receive the liquidation distribution in cash, out of assets of the WEC Trust (and after satisfaction of creditors of the WEC Trust as provided by applicable law). See "DESCRIPTION OF PREFERRED SECURITIES--Liquidation Distribution upon Dissolution." If we become subject to any voluntary or involuntary liquidation or bankruptcy, the property trustee, as holder of the corresponding junior subordinated debentures, would be one of our junior subordinated creditors. The property trustee would be subordinated in right of payment to all of our senior indebtedness and subordinated indebtedness, but it would be entitled to receive payment in full of principal and interest before our stockholders receive payments or distributions. We are the guarantor under each guarantee agreement and pursuant to the indenture, as borrower, have agreed to pay all costs, expenses and liabilities of each WEC Trust (other than the WEC Trust's obligations to the holders of its preferred securities). Accordingly, in the event of our liquidation or bankruptcy the positions of a holder of preferred securities and of a holder of corresponding junior subordinated debentures are expected to be substantially the same relative to our other creditors and to our stockholders. BOOK-ENTRY ISSUANCE The debt securities, preferred securities and corresponding junior subordinated debentures of a series may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, the depositary identified in the prospectus supplement relating to that series. The depositary will be DTC unless otherwise indicated in the applicable prospectus supplement for a series. Book-entry securities may be issued only in fully registered form and in either temporary or permanent form. Unless and until it is exchanged for the individual securities that it represents, a book- entry security may not be transferred except as a whole to a nominee of the depositary or to a successor depositary or any nominee of the successor. DTC has advised us that DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain custodial relationships with participants, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC. Purchases of book-entry securities within the DTC system must be made by or through direct participants, which will receive a credit for the book-entry securities on DTC's records. The ownership interest of each actual purchaser of each book-entry security (Beneficial Owner) is in turn to be recorded on the direct and 30 indirect participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participants through which the Beneficial Owners purchased book-entry securities. Transfers of ownership interests in the book-entry securities are to be accomplished by entries made on the books of participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in book-entry securities, except in the event that use of the book-entry system is discontinued. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global security. To facilitate subsequent transfers, all book-entry securities deposited by participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of book-entry securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the book-entry securities; DTC's records reflect only the identity of the direct participants to whose accounts such book-entry securities are credited, which may or may not be the Beneficial Owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers. We and the WEC Trusts expect that conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to Beneficial Owners and the voting rights of direct participants, indirect participants and Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. as the registered holder of the book-entry securities. Although voting with respect to the book-entry securities is limited to the holders of record of the book-entry securities, in those instances in which a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to book-entry securities. Under its usual procedures, DTC would mail an omnibus proxy to the relevant trustee as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those direct participants to whose accounts such book-entry securities are credited on the record date (identified in a listing attached to the omnibus proxy). As long as the book-entry securities are held by DTC or its nominee and DTC continues to make its same-day funds settlement system available to us, all payments on the book-entry securities (other than distribution payments on the preferred securities or corresponding junior subordinated debentures) will be made by us in immediately available funds to DTC. Distribution payments on the preferred securities or the corresponding junior subordinated debentures will be made by the relevant trustee to DTC. We and the WEC Trusts have been advised that DTC's practice is to credit direct participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such participant and not of DTC, the relevant trustee, the WEC Trust (as applicable) or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment on book-entry securities to DTC is our responsibility or the responsibility of the relevant trustee (as applicable), disbursement of such payments to direct participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of direct and indirect participants. Unless otherwise specified in the applicable prospectus supplement, if a depositary for a series of preferred securities is at any time unwilling, unable or ineligible to continue as depositary and we do not appoint a successor depositary within 90 days, we will issue individual preferred securities of such series in exchange for the global security representing that series of preferred securities. In addition, we may at any time and in our sole discretion, subject to any limitations described in the prospectus supplement relating to the preferred 31 securities, determine not to have any preferred securities of a series represented by one or more global securities and, in that event, will issue individual preferred securities of that series in exchange for the global security or securities representing that series of preferred securities. Further, if we so specify with respect to preferred securities of a series, an owner of a beneficial interest in a global security representing preferred securities of that series may, on terms acceptable to us, the property trustee and the depositary for such global security, receive individual preferred securities of that series in exchange for that owner's beneficial interests, subject to any limitations described in the prospectus supplement relating to those preferred securities. In that instance, a Beneficial Owner in the global security will be entitled to physical delivery of individual preferred securities of the series represented by the global security equal in liquidation amount to such beneficial interest and to have such preferred securities registered in its name. Individual preferred securities of the series so issued will be issued in the denominations set forth in the related prospectus supplement. DTC may discontinue providing its services as securities depositary with respect to debt securities at any time by giving reasonable notice to us or the indenture trustee. Under those circumstances, if we do not appoint a successor depositary within 90 days, we will issue individual definitive debt securities in exchange for all the global securities representing the debt securities. In addition, we may at any time and in our sole discretion determine not to have the debt securities represented by global securities and, in that event, will issue individual definitive debt securities in exchange for all the global securities representing the debt securities. Individual definitive debt securities so issued will be issued in denominations of $1,000 and any larger amount that is an integral multiple of $1,000 and registered in such names as DTC shall direct. If the WEC Trust issues certificated preferred securities, they will be registered in the name of the security holder. The preferred securities may be transferred or exchanged, based on administrative procedures in the trust agreement, without the payment of any service charge (other than any tax or other governmental charge) by contacting the registrar and transfer agent, The First National Bank of Chicago, One First National Plaza, Suite 0126, Chicago, Illinois 60670. Distribution payments will be made by check if the WEC Trust issues certificated preferred securities. Payment of the redemption price or liquidation amount will be made in immediately available funds when you surrender the preferred security. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that we and the WEC Trusts believe to be accurate, but we and the WEC Trusts assume no responsibility for the accuracy thereof. Neither we nor the WEC Trusts have any responsibility for the performance by DTC or its participants of their respective obligations as described herein or under the rules and procedures governing their respective operations. PLAN OF DISTRIBUTION We and/or any WEC Trust may sell the securities in any one or more of the following ways from time to time: (a) to or through underwriters or dealers; (b) directly to one or more purchasers; or (c) through agents. The prospectus supplement will set forth with respect to the securities being offered thereby the terms of the offering of those securities, including the name or names of any underwriters, the purchase price of those securities and the proceeds to us and/or a WEC Trust from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers, and any securities exchange on which those securities may be listed. Only underwriters so named in the applicable prospectus supplement are deemed to be underwriters in connection with the securities offered thereby. If underwriters are used in the sale, the securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase those securities will be subject to certain conditions precedent, and the underwriters 32 will be obligated to purchase all the securities of the series offered by us and/or the applicable WEC Trust and described in the applicable prospectus supplement if any of those securities are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Securities may also be offered and sold, if so indicated in the prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, by one or more firms ("remarketing firms") acting as principals for their own accounts or as agents for us and/or an applicable WEC Trust. Any remarketing firm will be identified and the terms of its agreement, if any, with us and its compensation will be described in the prospectus supplement. Remarketing firms may be deemed to be underwriters in connection with the securities remarketed thereby. Securities may also be sold directly by us and/or a WEC Trust or through agents designated by us from time to time. Any agent involved in the offering and sale of the securities in respect of which this prospectus is delivered will be named, and any commissions payable by us and/or a WEC Trust to such agent will be set forth, in the prospectus supplement. Unless otherwise indicated in the prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the prospectus supplement, we and/or a WEC Trust will authorize agents, underwriters or dealers to solicit offers by certain institutional investors to purchase securities providing for payment and delivery on a future date specified in the prospectus supplement. There may be limitations on the minimum amount which may be purchased by any such institutional investor or on the portion of the aggregate principal amount of the particular securities which may be sold pursuant to such arrangements. Institutional investors to which such offers may be made, when authorized, include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and such other institutions as may be approved by us and/or a WEC Trust. The obligations of any such purchasers pursuant to such delayed delivery and payment arrangements will not be subject to any conditions except (a) the purchase by an institution of the particular securities shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject, and (b) if the particular securities are being sold to underwriters, we and/or a WEC Trust shall have sold to such underwriters all of those securities other than the securities covered by such arrangements. Underwriters will not have any responsibility in respect of the validity of such arrangements or the performance by us or such institutional investors thereunder. If any underwriter or any selling group member intends to engage in stabilizing, syndicate short covering transactions, penalty bids or any other transaction in connection with the offering of securities that may stabilize, maintain, or otherwise affect the price of those securities, such intention and a description of such transactions will be described in the prospectus supplement. Agents and underwriters may be entitled under agreements entered into with us and/or the applicable WEC Trust to indemnification by us against certain civil liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may engage in transactions with, or perform services for, us and our subsidiaries in the ordinary course of business. CERTAIN LEGAL MATTERS Unless otherwise indicated in the applicable prospectus supplements, certain legal matters in connection with the securities will be passed upon (a) for us by Quarles & Brady LLP, Milwaukee, Wisconsin, our legal counsel, (b) for the WEC Trusts (with respect to the validity of the preferred securities under Delaware law) by Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, special Delaware counsel to us and the WEC Trusts, and (c) for any underwriters by Cahill Gordon & Reindel (a partnership including a professional corporation), New York, New York. Larry J. Martin, a partner in Quarles & Brady LLP, serves as our general counsel. 33 EXPERTS The financial statements incorporated in this prospectus by reference to our Annual Report on Form 10-K for the year ended December 31, 1997, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in auditing and accounting. Future audited financial statements incorporated in this prospectus by reference to future filings under the Exchange Act, as provided under "WHERE YOU CAN FIND MORE INFORMATION," will be so incorporated in reliance on the related report or reports of the firm of independent accountants auditing such financial statements, given on such authority of such firm, if and to the extent such filings include the consent of such firm to the incorporation of such report or reports herein. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. and through our own web site at http://wisenergy.com. You may also read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, and Chicago, as well as at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York, 10005, where our common stock is listed under the symbol"WEC." You can call the SEC at 1-800-732-0330 for further information about the public reference rooms. The SEC allows us to "incorporate by reference" the information we file with them, which means we are assumed to have disclosed important information to you when we refer you to documents that are on file with the SEC. The information we have incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future documents we file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of the securities covered by this prospectus. . Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and Amendment No. 1 (on Form 10-K/A) dated June 27, 1998. . Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998. . Current Reports on Form 8-K dated December 23, 1997 and April 28, 1998. You may request a copy of these documents at no cost by writing to us at the following address: Wisconsin Energy Corporation 231 West Michigan Street P. O. Box 2949 Milwaukee, Wisconsin 53201 Attn: Mr. Thomas H. Fehring, Corporate Secretary Telephone: (414) 221-2662 You should rely only on the information provided in or incorporated by reference (and not later changed) in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with additional or different information. We are not making an offer of any securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. 34 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6,000,000 Preferred Securities WEC CAPITAL TRUST I % Trust Preferred Securities (TruPS(R)) ($25 liquidation amount per Preferred Security) Fully and unconditionally guaranteed, as described herein, by Wisconsin Energy Corporation [Logo Appears Here] ------------ PROSPECTUS SUPPLEMENT , 1999 (Including prospectus dated , 1999) ------------ Salomon Smith Barney Merrill Lynch & Co. Bear, Stearns & Co. Inc. Robert W. Baird & Co. Incorporated - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The estimated expenses in connection with the issuance and distribution of the securities covered by this Registration Statement are as follows: SEC registration fee (actual)................................... $ 83,400 Trustee's fee and expenses...................................... 26,000 Printing and engraving expenses................................. 65,000 Legal fees and expenses......................................... 150,000 Accounting fees and expenses.................................... 60,000 Rating agency fees.............................................. 90,000 New York Stock Exchange listing fees............................ 83,900 Miscellaneous................................................... 16,700 -------- Total....................................................... $575,000 ========
Item 15. Indemnification of Directors and Officers. Wisconsin Energy Corporation ("Wisconsin Energy") is incorporated under the Wisconsin Business Corporation Law (the "WBCL"). Under Section 180.0851(1) of the WBCL, Wisconsin Energy is required to indemnify a director or officer, to the extent such person is successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if such person was a party because he or she was a director or officer of Wisconsin Energy. In all other cases, Wisconsin Energy is required by Section 180.0851(2) to indemnify a director or officer against liability incurred in a proceeding to which such person was a party because he or she was a director or officer of Wisconsin Energy, unless it is determined that he or she breached or failed to perform a duty owed to Wisconsin Energy and the breach or failure to perform constitutes: (i) a willful failure to deal fairly with Wisconsin Energy or its shareholders in connection with a matter in which the director or officer has a material conflict of interest; (ii) a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful; (iii) a transaction from which the director or officer derived an improper personal profit; or (iv) willful misconduct. Section 180.0858(1) provides that, subject to certain limitations, the mandatory indemnification provisions do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under Wisconsin Energy's Restated Articles of Incorporation, Bylaws, any written agreement or a resolution of the Board of Directors or shareholders. Section 180.0859 of the WBCL provides that it is the public policy of the State of Wisconsin to require or permit indemnification, allowance of expenses and insurance to the extent required or permitted under Sections 180.0850 to 180.0858 of the WBCL, for any liability incurred in connection with a proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities. Section 180.0828 of the WBCL provides that, with certain exceptions, a director is not liable to a corporation, its shareholders, or any person asserting rights on behalf of the corporation or its shareholders, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director, unless the person asserting liability proves that the breach or failure to perform constitutes any of the four exceptions to mandatory indemnification under Section 180.0851(2) referred to above. Under Section 180.0833 of the WBCL, directors of Wisconsin Energy against whom claims are asserted with respect to the declaration of improper dividends or distributions to shareholders or certain other improper acts which they approved are entitled to contribution from other directors who approved such actions and from shareholders who knowingly accepted an improper dividend or distribution, as provided therein. II-1 Articles V and VI of Wisconsin Energy's Bylaws provides that Wisconsin Energy will indemnify to the fullest extent permitted by law any person who is or was a party or threatened to be made a party to any legal proceeding by reason of the fact that such person is or was a director or officer of Wisconsin Energy, or is or was serving at the request of Wisconsin Energy as a director or officer of another enterprise, against expenses (including attorney fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such legal proceeding. Wisconsin Energy's Restated Articles of Incorporation and Bylaws do not limit the indemnification to which directors and officers are entitled under the WBCL. Officers and directors of Wisconsin Energy are covered by insurance policies purchased by Wisconsin Energy under which they are insured (subject to exceptions and limitations specified in the policies) against expenses and liabilities arising out of actions, suits or proceedings to which they are parties by reason of being or having been such directors or officers. Under each trust agreement, Wisconsin Energy will agree to indemnify each of the issuer trustees of the WEC Trusts or any predecessor issuer trustee for the WEC Trusts, and to hold the issuer trustees harmless against, any loss, damage, claims, liability or expense incurred without negligence or bad faith or its part, arising out of or in connection with the acceptance or administration of the trust agreements, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the trust agreements. Item 16. Exhibits. See Exhibit Index following the Signatures page in this Registration Statement, which Exhibit Index is incorporated herein by reference. Item 17. Undertakings. The undersigned Registrants hereby undertake (in accordance with the corresponding lettered undertakings in Item 512 of Regulation S-K): (a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the Registration Statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. II-2 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Reference is made to the indemnification provisions described in Item 15 of this Registration Statement. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (i) (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on March 12, 1999. WISCONSIN ENERGY CORPORATION (Registrant) /s/ C. H. Baker By: ____________________________ C. H. Baker, Treasurer and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed by the following persons in the capacities indicated as of the 12th day of March, 1999.
Signature Title --------- ----- /s/ R. A. Abdoo* Chairman of the Board, President and Chief ___________________________________________ Executive Officer (Principal Executive R. A. Abdoo Officer) and Director /s/ C. H. Baker Treasurer and Chief Financial Officer ___________________________________________ (Principal Financial Officer) C. H. Baker /s/ A. K. Klisurich* Controller (Principal Accounting Officer) ___________________________________________ A. K. Klisurich /s/ J. F. Ahearne* Director ___________________________________________ J. F. Ahearne /s/ J. F. Bergstrom* Director ___________________________________________ J. F. Bergstrom /s/ B. L. Bowles* Director ___________________________________________ B. L. Bowles /s/ R. A. Cornog* Director ___________________________________________ R. A. Cornog /s/ R. R. Grigg, Jr.* Director ___________________________________________ R. R. Grigg, Jr. /s/ G. B. Johnson* Director ___________________________________________ G. B. Johnson /s/ J. N. MacDonough* Director ___________________________________________ J. N. MacDonough /s/ J. B. North* Director ___________________________________________ J. B. North /s/ F. P. Stratton, Jr.* Director ___________________________________________ F. P. Stratton, Jr.
* By signing his name hereto, C. H. Baker signs this document on behalf of each person indicated above pursuant to the power of attorney duly executed by such persons. /s/ C. H. Baker By: ____________________________ C. H. Baker, Attorney-in-Fact II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, WEC Capital Trust I certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on March 12, 1999. WEC CAPITAL TRUST I (Registrant) By: Wisconsin Energy Corporation, as Depositor /s/ C. H. Baker By: ____________________________ C. H. Baker Treasurer and Chief Financial Officer II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, WEC Capital Trust II certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on March 12, 1999. WEC CAPITAL TRUST II (Registrant) By: Wisconsin Energy Corporation, as Depositor /s/ C. H. Baker By: ____________________________ C. H. Baker Treasurer and Chief Financial Officer II-6 WISCONSIN ENERGY CORPORATION (the "Company") (Commission File No. 1-9057) EXHIBIT INDEX TO FORM S-3 REGISTRATION STATEMENT The following exhibits are filed with or incorporated by reference in this Registration Statement:
Exhibit Description ------- ----------- 1.1*** Form of Underwriting Agreement for Debt Securities 1.2* Form of Underwriting Agreement for Preferred Securities 4.1** Form of Indenture for Debt Securities 4.2** Form of Securities Resolution 4.3** Certificate of Trust of WEC Capital Trust I 4.4** Trust Agreement of WEC Capital Trust I 4.5** Certificate of Trust of WEC Capital Trust II 4.6** Trust Agreement of WEC Capital Trust II 4.7** Form of Amended and Restated Trust Agreement for WEC Capital Trusts I and II 4.8** Form of Preferred Security Certificate for WEC Capital Trusts I and II (incorporated by reference to Exhibit D of Exhibit 4.7) 4.9** Form of Guarantee Agreement for WEC Capital Trusts I and II 5.1** Opinion of Quarles & Brady LLP 5.2** Opinion of Morris, Nichols, Arsht & Tunnell as to the legality of the Preferred Securities to be issued by WEC Capital Trust I and WEC Capital Trust II 8*** Opinion re tax matters of Quarles & Brady LLP 12** Statement of Computation of Ratio of Earnings to Fixed Charges 23.1** Consent of PricewaterhouseCoopers LLP 23.2** Consent of Quarles & Brady LLP 23.3** Consent of Morris, Nichols, Arsht & Tunnell 24** Power of Attorney 25.1** Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of The First National Bank of Chicago with respect to the Indenture for Debt Securities and the Guarantees for the benefit of the holders of Preferred Securities of WEC Capital Trust I and WEC Capital Trust II 25.2** Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of The First National Bank of Chicago with respect to the Amended and Restated Trust Agreement of WEC Capital Trust I 25.3** Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of The First National Bank of Chicago with respect to the Amended and Restated Trust Agreement of WEC Capital Trust II
- -------- * Filed herewith. **Previously filed. ***To be filed by amendment or under cover of Form 8-K and incorporated herein by reference. II-7 EX-1.2 2 FORM OF UNDERWRITING AGREEMENT EXHIBIT 1.2 [FORM OF UNDERWRITING AGREEMENT FOR TRUST PREFERRED SECURITIES] WEC CAPITAL TRUST [ ] [ ] TRUST PREFERRED SECURITIES, SERIES [ ] (liquidation amount $[ ] per preferred security) guaranteed on a junior subordinated basis by Wisconsin Energy Corporation UNDERWRITING AGREEMENT [Date] To the Underwriters set forth on Schedule A hereto Ladies and Gentlemen: WEC Capital Trust [ ], a statutory business trust formed under the laws of the State of Delaware (the "Trust"), and Wisconsin Energy Corporation, a Wisconsin corporation, as depositor of the Trust and as guarantor (the "Company" and, together with the Trust, the "Issuers"), propose subject to the terms and conditions stated herein, that the Trust issue and sell to Underwriters named in Schedule A hereto (the "Underwriters") an aggregate of [ ] [ ]% Trust Preferred Securities, Series [ ] (liquidation amount $[ ] per preferred security) further set forth in Schedule B hereto representing beneficial interests in the Trust (the "Securities"), guaranteed on a junior subordinated basis by the Company as to the payment of distributions, and as to payments on liquidation or redemption, to the extent set forth in a guarantee agreement to be dated [ ], [ ] (the "Guarantee") between the Company and The First National Bank of Chicago, as trustee (the "Guarantee Trustee"). The Trust is to purchase, with the proceeds of the sale of the Securities to the Underwriters and the sale of its Common Securities (liquidation amount $[ ] per common security) (the "Common Securities") to the Company, an aggregate of $[ ] Corresponding Junior Subordinated Debentures (the "Corresponding Junior Subordinated Debentures") of the Company, to be issued pursuant to a securities resolution with respect to an indenture (the "Indenture") dated as of [ ], [ ] between the Company and The First National Bank of Chicago, as trustee (the "Corresponding Debt Trustee"). The payments made by the Company on the Corresponding Junior Subordinated Debentures are established at a level sufficient to permit the Trust, upon receipt of such payments, to make payments on the Securities in accordance with their terms. -2- The Issuers understand that the Underwriters propose to make a public offering of the Securities as soon as their representative or representatives (the "Representatives") deem advisable after this Agreement has been executed and delivered. SECTION 1. Representations and Warranties. (a) Representations and Warranties by the Issuers. Each of the Issuers jointly and severally represents and warrants to each Underwriter as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows: (i) Compliance with Registration Requirements. The Issuers meet the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "1933 Act"). The Issuers have filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (File No. 333-73137), which has become effective (including information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the 1933 Act), for the registration under the 1933 Act of the Securities. Such registration statement meets the requirements set forth in Rule 415(a)(1)(x) under the 1933 Act and complies in all other material respects with said Rule, and as amended at the date of this Agreement, including the exhibits thereto, is hereinafter called the "Registration Statement". The form of prospectus included in such Registration Statement is hereinafter called the "Basic Prospectus"; the form of prospectus supplement included in such Registration Statement, or, if the Company files with the Commission a subsequent prospectus supplement to be used in connection the issuance and sale of the Securities under the Prospectus in accordance with Rule 424(b) under the 1933 Act, such subsequent prospectus, is hereinafter called the "Prospectus Supplement"; and the Basic Prospectus, as supplemented by the Prospectus Supplement, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) is hereinafter called the "Prospectus". Any preliminary form of the Prospectus which has heretofore been filed pursuant to Rule 424(b) is hereinafter called the "Preliminary Prospectus". Any reference herein to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended (the "1934 Act"), on or before the date of this Agreement, or the issue date of the Basic Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be; and any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the filing of any document under the 1934 Act after the date of this -3- Agreement, or the issue date of the Basic Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be, deemed to be incorporated therein by reference. (ii) No Misstatements or Omissions. As of the date hereof, when the Prospectus is first filed or transmitted for filing pursuant to Rule 424(b) under the 1933 Act, when, prior to the Closing Date (as hereinafter defined), any amendment to the Registration Statement becomes effective (including the filing of any document incorporated by reference in the Registration Statement), when any supplement to the Prospectus is filed with the Commission and at the Closing Date, (i) the Registration Statement, as then amended as of any such time, and the Prospectus, as then amended or supplemented as of such time, and each of the Trust Agreement (as defined below), the Indenture and the Guarantee will comply in all material respects with the applicable requirements of the 1933 Act, the Trust Indenture Act of 1939, as amended (the "1939 Act"), and the 1934 Act and the respective rules and regulations thereunder (the "1934 Act Regulations") and (ii) neither the Registration Statement, as then amended as of such time, nor the Prospectus, as then amended or supplemented, as of such time, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; provided, however, that the Company makes no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility (Form T-1) under the 1939 Act of the applicable trustees or (ii) the information contained in or omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation of the Registration Statement and the Prospectus. (iii) Status of Trust. The Trust has been duly created and is validly existing as a statutory business trust in good standing under the Business Trust Act of the State of Delaware with the power and authority to enter into and perform its obligations under this Agreement, the Securities, the Common Securities and the Trust Agreement (as defined below) and to own property and conduct its business as described in the Prospectus, and has conducted and will conduct no business other than the transactions contemplated by this Agreement and as described in the Prospectus; the Trust is not a party to or bound by any agreement or instrument other than this Agreement, the Amended and Restated Trust Agreement (the "Trust Agreement") between the Company and the trustees named therein (the "Trustees") and the agreements and instruments contemplated by the Trust Agreement and the Prospectus. (iv) Authorization of Common Securities. The Common Securities have been duly authorized by the Trust and upon delivery by the Trust to the Company -4- against payment therefor as described in the Prospectus, will be duly and validly issued and fully paid and non-assessable beneficial interests in the Trust and will conform to the description thereof contained in the Prospectus; the issuance of the Common Securities is not subject to preemptive or other similar rights; and at the Closing Time, all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (v) Authorization of Securities. The Securities have been duly authorized by the Trust, and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and, subject to the qualifications set forth herein, fully paid and non-assessable beneficial interests in the Trust and will conform in all material respects to the description thereof contained in the Prospectus; the issuance of the Securities is not subject to preemptive or other similar rights; and the holders of the Securities (the "Securityholders") will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware (subject to the obligations of the Securityholders under the Trust Agreement to make certain payments to the Trust to defray expenses such as any applicable transfer and stamp taxes and to provide security or indemnity in connection with the replacement of destroyed, lost or stolen certificates or in connection with directing the Property Trustee under the Trust Agreement to exercise its rights and powers at the request of Securityholders). (vi) Authorization of Company Agreements. The Guarantee, the Corresponding Junior Subordinated Debentures, the Trust Agreement and the Indenture (collectively, the "Company Agreements") have each been duly authorized by the Company and when validly executed and delivered by the Company and, in the case of the Guarantee, by the Guarantee Trustee, in the case of Trust Agreement, by the Trustees and, in the case of the Indenture, by the Corresponding Debt Trustee, and, in the case of Corresponding Junior Subordinated Debentures, when validly issued by the Company and validly authenticated and delivered by the Corresponding Debt Trustee, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Trust Agreement, the Indenture and the Guarantee have been duly qualified under the 1933 Act, as amended; the Corresponding Junior Subordinated Debentures are entitled to the benefits of the Indenture; and the Company Agreements will conform to the descriptions thereof in the Prospectus. -5- (vii) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by each of the Issuers. (viii) Absence of Defaults and Conflicts. None of the Company, the Trust or any "significant subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation S-X (each a "Subsidiary" and, collectively, the "Subsidiaries") and each of which is listed on Schedule C hereto) is in violation of its charter, by-laws or other organizational documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company, the Trust or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company, the Trust or any Subsidiary is subject (collectively, "Agreements and Instruments") except for such defaults that would not have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business (a "Material Adverse Effect"); and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and in the Registration Statement (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption "Use of Proceeds") and compliance by each of the Trust and the Company with its obligations hereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the Trust or any Subsidiary pursuant to, the Agreements and Instruments (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter, by-laws or other organizational documents of the Company, the Trust or any Subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company, the Trust or any Subsidiary or any of their assets, properties or operations. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company, the Trust or any Subsidiary. -6- (ix) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by each of the Issuers of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or made or as may be required under the 1933 Act or the rules and regulations of the Commission thereunder (the "1933 Act Regulations") or state securities laws and except for the qualification of the Trust Agreement, the Indenture and the Guarantee under the 1939 Act. (x) Investment Company Act. Each of the Issuers is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). (b) Officer's Certificates. Any certificate signed by any officer of the Company, any of its Subsidiaries or the Trust delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company and the Trust to each Underwriter as to the matters covered thereby. SECTION 2. Sale and Delivery to Underwriters; Closing. (a) Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Issuers agree to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Issuers, at the price and with the terms set forth in Schedule B, the number of Securities set forth in Schedule A opposite the name of such Underwriter, plus any additional amount of Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof. (b) Payment. Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the offices of the Representatives, or at such other place as shall be agreed upon by the Representatives and the Company at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery being herein called "Closing Time"). -7- Payment shall be made to the Trust by wire transfer of immediately available or next day funds as set forth in Schedule B to a bank account(s) designated by the Trust against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. (c) Denominations; Registration. Certificates for the Securities shall be in such denominations and registered in such names as the Representatives may request in writing at least one full business day before the Closing Time. The certificates for the Securities will be made available for examination and packaging by the Representatives in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time. SECTION 3. Covenants of the Issuers. Each of the Issuers jointly and severally covenants with each Underwriter as follows: (a) Compliance with Securities Regulations and Commission Requests. Subject to Section 3(b), it will prepare the Prospectus in a form approved by the Representatives and file such Prospectus (pursuant to Rule 424(b) within the time prescribed under Rule 424(b) or Rule 430(A)(3), as the case may be) and will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. It will promptly effect the filings necessary pursuant to Rule 424(b) and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. It will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Filing of Amendments. It will give the Representatives notice of its intention to file or prepare any amendment to the Registration Statement or any amendment, supplement or revision to the Prospectus, whether pursuant to the 1933 -8- Act, the 1934 Act or otherwise, will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall object. (c) Delivery of Registration Statements. It has furnished or will deliver to the Representatives and counsel for the Underwriters, without charge, two originally signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and two originally signed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"), except to the extent permitted by Regulation S-T. (d) Delivery of Prospectuses. It has delivered to each Underwriter, without charge, as many copies of each Preliminary Prospectus relating to the Securities as such Underwriter reasonably requested, and it hereby consents to the use of such copies for purposes permitted by the 1933 Act. It will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) Continued Compliance with Securities Laws. It will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Issuers, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in -9- the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, it will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and it will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. (f) Blue Sky Qualifications. It will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect for a period of not less than one year from the later of the effective date of the Registration Statement; provided, however, that it shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which they are not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which they are not otherwise so subject. In each jurisdiction in which the Securities have been so qualified, it will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement. (g) Rule 158. It will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. (h) Use of Proceeds. It will cause the net proceeds received by the Trust from the sale of the Securities to be used in the manner specified in the Prospectus under "Use of Proceeds". (i) Listing. It will use its best efforts to cause the listing of the Securities on any such stock exchange or exchanges as are set forth in Schedule B hereto. (j) Restriction on Sale of Securities. During a period of 30 days following the Closing Time, it will not, without the prior written consent of the Representatives, sell or contract to sell or announce the offering of, any securities of either of the Issuers with characteristics and terms similar to those of the Securities. -10- (k) Reporting Requirements. During the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, the Company will file or cause to be filed all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. Payment of Expenses. (a) Expenses. The Issuers will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits and the Form T-1) as originally filed and of each amendment thereto, (ii) the preparation, printing, reproduction and delivery to the Underwriters of this Agreement, any Agreement among Underwriters, the Indenture, the Trust Agreement, the Guarantee and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees and disbursements of the Issuers' counsel, accountants and other advisors, (v) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith, (vi) the printing and delivery to the Underwriters of copies of each Preliminary Prospectus and of the Prospectus and any amendments or supplements thereto, (vii) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (viii) any fees payable in connection with the rating of the Securities, (ix) the fees and expenses incurred in connection with the listing, if applicable, of the Securities on any such exchange or exchanges as are listed on Schedule B hereto, (x) all fees and expenses of trustees, and (xi) the fees and expenses incident to the performance of the Issuers' other obligations hereunder. (b) Termination of Agreement. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the Issuers shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. -11- SECTION 5. Conditions of Underwriters' Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Issuers contained in Section 1(a) hereof or in certificates of any officer of the Issuers or any Subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by each of the Issuers of its respective covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the 1933 Act Regulations and in accordance with Section 3(a) hereof; and no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission. (b) Opinion of Counsel for Company and Trust. At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of (i) Quarles & Brady LLP, counsel for the Issuers, to the effect set forth in Exhibit A-1 hereto and (b) Sally R. Bentley, Esq., Counsel for the Issuers to the effect set forth in Exhibit A-2 hereto, each in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters and addressed to the Underwriters and to such further effect as counsel to the Underwriters may reasonably request. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of Wisconsin and the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, the Trust and the Company's Subsidiaries, certificates of representatives of the applicable trustees and certificates of public officials. In rendering its opinion, Quarles & Brady LLP may rely as to the exempt status of the Company under the Public Utility Holding Company Act, upon the opinion of Sally R. Bentley, Esq. (c) Opinion of Counsel for Underwriters. At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Cahill Gordon & Reindel, the counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters and addressed to the Underwriters with respect to such matters as the Representatives may reasonably request. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and the federal law of the United States and the General Corporation Law of the State of Delaware, upon the -12- opinions of counsel satisfactory to the Representatives. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, the Trust and the Company's Subsidiaries, certificates of representatives of the applicable Trustees and certificates of public officials. (d) Opinion of Special Delaware Counsel. At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Morris, Nichols, Arsht & Tunnell, special Delaware counsel for the Issuers, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters and addressed to the Underwriters to the effect set forth in Exhibit B hereto and to such further effect as counsel to the Underwriters may reasonably request. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Trust, the Company and the Company's Subsidiaries, certificates of representatives of the applicable trustees and certificates of public officials. (e) Officers' Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) each of the Trust and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or are, to the knowledge of such officers, contemplated by the Commission. (f) Trust Performance. The Trust shall have performed all of its obligations under this Agreement which are to be performed by the terms hereof at or before the Closing Time. -13- (g) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Representatives shall have received from the Company's independent public accountants a letter dated such date, in form and substance satisfactory to the Representatives (substantially in the form of Annex A hereto), together with signed or reproduced copies of such letter for each of the other Underwriters and addressed to the Underwriters containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (h) Bring-down Comfort Letter. At Closing Time, the Representatives shall have received from the Company's independent public accountants a letter, dated as of Closing Time, together with signed or reproduced copies of such letter for each of the other Underwriters and addressed to the Underwriters, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (g) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time. (i) Maintenance of Rating. At Closing Time, the Securities shall be rated by each of Moody's Investor's Service Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. as set forth in Schedule B hereto. Since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of the Company's debt securities by any "nationally recognized statistical rating agency," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly announced that is has under surveillance or review its rating of the Securities or any of the Company's other debt securities. (j) Approval of Listing. At Closing Time, the Securities shall have been approved for listing on such exchange or exchanges as are listed on Schedule B hereto, subject only to official notice of issuance. (k) Additional Documents. At Closing Time counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Issuers in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representatives and counsel for the Underwriters. -14- (l) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Issuers at any time at or prior to Closing Time and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. Indemnification. (a) Indemnification of Underwriters. Each of the Issuers agrees jointly and severally to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Issuers; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representatives), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that (i) this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or al- -15- leged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Issuers by any Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto) or any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) and (ii) such indemnity with respect to any Preliminary Prospectus or the Prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, liability, claim, damage or expense purchased the Securities which are the subject thereof if such person did not receive a copy of the Prospectus (or the Prospectus, as amended or supplemented) excluding documents incorporated therein by reference at or prior to the confirmation of the sale of the Securities to such person in any case where such delivery is required by the 1933 Act and the untrue statement or omission of a material fact contained in any Preliminary Prospectus or the Prospectus was corrected in the Prospectus (or the Prospectus, as amended or supplemented). This indemnity agreement will be in addition to any liability which the Issuers may otherwise have. (b) Indemnification of Issuers, Trustees, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Issuers, their respective directors or trustees, each of their officers who signed the Registration Statement, and each person, if any, who controls either of the Issuers within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Issuers by such Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto) or such Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Representatives, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Issuers. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event -16- shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuers on the one hand and the Underwriters on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Underwriters on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting ex- -17- penses) received by the Issuers and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on such cover. The relative fault of the Issuers on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers or by an Underwriter in writing through the Representatives and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company or trustee of the Trust, each officer of the Company or the Trust who signed the Registration Statement, and each person, if any, who controls either of the Issuers within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as Issuers. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Securities set forth opposite their respective names in Schedule A hereto and not joint. -18- SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Trust, Company or any Subsidiaries of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Issuers, and shall survive delivery of the Securities to the Underwriters. SECTION 9. Termination of Agreement. (a) Termination; General. The Representatives may terminate this Agreement, by notice to the Issuers, at any time at or prior to Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise or the Trust, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market has been suspended or materially limited (other than to provide for an orderly market), or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or (iv) if a banking moratorium has been declared by either Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at Closing Time to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such principal amounts as may be agreed upon and upon the -19- terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then: (a) if the aggregate principal amount of the Defaulted Securities does not exceed 10% of the aggregate principal amount of the Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the aggregate principal amount of the Defaulted Securities exceeds 10% of the aggregate principal amount of the Securities to be purchased on such date, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement either (i) the Representatives or (ii) the Issuers shall have the right to postpone Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 10. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representatives at the address set forth on Schedule B; notices to the Issuers shall be directed to them at 231 West Michigan Street, Milwaukee, Wisconsin 53201, attention of Chief Financial Officer. SECTION 12. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Issuers and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Issuers and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters, the Issuers and their respective successors, and said controlling persons and officers, directors, -20- trustees and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 14. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 15. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -21- If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Issuers and the Underwriters. Very truly yours, WISCONSIN ENERGY CORPORATION By: ___________________________________ Name: Title: WEC CAPITAL TRUST [ ] By: ___________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first written above. [NAME(S) OF REPRESENTATIVE(S)] By: ____________________________ Authorized Signatory For itself and the other Under- writers, if any, named in Schedule A to the foregoing Agreement SCHEDULE A WEC CAPITAL TRUST [ ]
Number of Preferred Underwriter Securities ----------- ---------- $ Total............................................................ $ =====================
SCHEDULE B WEC CAPITAL TRUST [ ] Title: [ %] Trust Preferred Securities, Series [ ]. Liquidation Amount [at Maturity]: $ (liquidation amount $[ ] per preferred security). Distributions: [ % per annum, from , , payable [quarterly] on , , and , commencing , , to holders of record on the preceding on , , or , as the case may be.] Maturity: , . Optional Redemption: Sinking Fund: Listing: Rating: Moody's Investor's Service Inc.: Standard & Poor's Ratings Group: Purchase Price: % of liquidation amount, plus accrued distributions [, if any,] from , . Expected Reoffering Price: % of liquidation amount, subject to change by the [Representative[s] [Underwriters]. Closing: A.M. on , , at the offices of [ ], [[in New York] [Chicago] Clearing House (next day)] [Federal (same day)] funds. Settlement and Trading: [Physical certificated form.] [Book-Entry Only via the Depository Trust Company ("DTC"). The Securities [will] [will not] trade in DTC's Same Day Funds Settlement System.] Notices: Notices to be given to the Underwriters should be directed to the Representatives as follows: The respective numbers of the Securities to be purchased by each of the Underwriters are set forth opposite their names in Schedule A hereto. SCHEDULE C WISCONSIN ENERGY CORPORATION List of Significant Subsidiaries A-1 Exhibit A-1 FORM OF OPINION OF ISSUERS' COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) Capitalized terms used herein shall have the same definitions as set forth in the underwriting agreement (the "Agreement") to which this Exhibit A is attached. (i) The Company has been duly incorporated and is validly existing as a corporation in active status under the laws of the State of Wisconsin. (ii) The Agreement has been duly authorized, executed and delivered by the Company. (iii) The Guarantee, the Corresponding Junior Subordinated Debentures, the Trust Agreement and the Indenture have each been duly authorized by the Company and when validly executed and delivered by the Company and, in the case of the Guarantee, by the Guarantee Trustee, in the case of Trust Agreement, by the Trustees and, in the case of the Indenture, by the Corresponding Debt Trustee, and, in the case of Corresponding Junior Subordinated Debentures, when validly issued by the Company and validly authenticated and delivered by the Corresponding Debt Trustee, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Trust Agreement, the Indenture and the Guarantee have been duly qualified under the 1939 Act; the Corresponding Junior Subordinated Debentures are entitled to the benefits of the Indenture; and the Company Agreements conform in all material respects to the descriptions thereof in the Prospectus. (iv) The Registration Statement has been declared effective under the 1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. (v) The Registration Statement, the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules included therein or omitted therefrom and the Statements of Eligibility on Form T-1 of the applicable trustees, as to which we express no opinion) appear on their face to comply as A-1 to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act. (vi) The documents incorporated by reference in the Prospectus (other than the financial statements and supporting schedules included therein or omitted therefrom, as to which we express no opinion), when they became effective or were filed with the Commission, as the case may be, appear on their face to comply as to form in all material respects with the requirements of the 1933 Act or the 1934 Act, as applicable, and the rules and regulations of the Commission thereunder. (vii) To the best of our knowledge, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign (other than under the 1933 Act and the 1933 Act Regulations and the 1939 Act, which have been obtained or made, or as may be required under the securities or blue sky laws of the various states, as to which we express no opinion) is necessary or required in connection with the due authorization, execution and delivery of the Agreement or for the offering, issuance, sale or delivery of the Securities. (viii) Neither the Company nor the Trust is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the 1940 Act. (ix) The Trust Agreement, the Indenture and the Guarantee have been duly qualified under the 1939 Act. (x) The Securities, the Common Securities, the Guarantee and the Corresponding Junior Subordinated Debentures conform as to legal matters in all material respects to the statements concerning them in the Prospectus. (xi) The statements made in the Prospectus under the caption "United States Taxation" to the extent they matters of law or legal conclusions, have been reviewed by such counsel and are accurate and correct in all material respects and fairly present the information set forth therein, and that the Trust will be characterized for United States federal income tax purposes as a grantor trust and will not be taxable as a corporation. We have participated in conferences with officers and other representatives of the Issuers, representatives of the Underwriters and representatives of the independent public accountants for the Issuers at which conferences the contents of the Prospectus and the Registration Statement and related matters were discussed and, although we have not independently verified, are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (except as otherwise indicated above), we advise you that, on the basis of the foregoing (relying as to materiality to the extent we deem appropriate upon the opinions of officers and other representatives of the Issuers), no facts have come to our attention that lead us to believe that the Registration Statement or any amendment thereto, at the time such Registration Statement or any such amendment became effective, contained an untrue statement of a A-2 material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of its date or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we express no comment with respect to the Forms T-1 or the financial statements, including the notes thereto, or any other financial or statistical data found in or derived from the internal accounting and other records of the Company and its Subsidiaries set forth or referred to in the Registration Statement or the Prospectus). In rendering such opinion, such counsel may rely as to matters of fact (but not as to legal conclusions), to the extent they deem proper, on certificates of responsible officers of the Trust, the Company and its Subsidiaries, representatives of the applicable trustees and public officials. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of Wisconsin and the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991). A-3 Exhibit A-2 FORM OF OPINION OF ISSUERS' COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) Capitalized terms used herein shall have the same definitions as set forth in the underwriting agreement (the "Agreement") to which this Exhibit A is attached. (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Wisconsin. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under the Agreement. (iii) Each Subsidiary set forth on Schedule C to the Agreement has been duly incorporated and is validly existing as a corporation under the laws of the jurisdiction of its incorporation, and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; except as otherwise disclosed in the Registration Statement, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable (except as otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, as judicially interpreted) and, to the best of our knowledge, is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; to the best of our knowledge, none of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary. (iv) The Agreement has been duly authorized, executed and delivered by the Company. (v) The Guarantee, the Corresponding Junior Subordinated Debentures, the Trust Agreement and the Indenture have each been duly authorized by the Company and when validly executed and delivered by the Company and, in the case of the Guarantee, by the Guarantee Trustee, in the case of Trust Agreement, by the Trustees and, in the case of the Indenture, by the Corresponding Debt Trustee, and, in the case of Corresponding Junior Subordinated Debentures, when validly issued by the Company and validly authenticated and delivered by the Corresponding Debt Trustee, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Trust Agreement, the Indenture and the Guarantee have been duly qualified under the 1939 Act, as amended; the A-1 Corresponding Junior Subordinated Debentures are entitled to the benefits of the Indenture; and the Company Agreements conform in all material respects to the descriptions thereof in the Prospectus. (vi) The Registration Statement has been declared effective under the 1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. (vii) The Registration Statement, the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules included therein or omitted therefrom and the Statements of Eligibility on Form T-1 of the applicable trustees, as to which we express no opinion) appear on their face to comply as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act. (viii) The documents incorporated by reference in the Prospectus (other than the financial statements and supporting schedules included therein or omitted therefrom, as to which we express no opinion), when they became effective or were filed with the Commission, as the case may be, appear on their face to comply as to form in all material respects with the requirements of the 1933 Act or the 1934 Act, as applicable, and the rules and regulations of the Commission thereunder. (ix) To the best of our knowledge, there are no statutes or regulations that are required to be described in the Prospectus that are not described as required. (x) All descriptions in the Registration Statement of written contracts and other documents to which the Company or its Subsidiaries are a party are accurate in all material respects; to the best of our knowledge, there are no franchises, contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. (xi) To the best of our knowledge, neither the Company nor any Subsidiary is in violation of its charter or by-laws and no default by the Company or any Subsidiary exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument that is described or referred to in the Registration Statement or the Prospectus or filed or incorporated by reference as an exhibit to the Registration Statement. A-2 (xii) To the best of our knowledge, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign (other than under the 1933 Act and the 1933 Act Regulations and the 1939 Act, which have been obtained or made, or as may be required under the securities or blue sky laws of the various states, as to which we express no opinion) is necessary or required in connection with the due authorization, execution and delivery of the Agreement or for the offering, issuance, sale or delivery of the Securities. (xiii) The execution, delivery and performance of the Agreement and the Company Agreements and the consummation of the transactions contemplated in the Agreement and in the Registration Statement (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption "Use Of Proceeds") and compliance by each of the Company and the Trust with its obligations under the Agreement and the Company Agreements do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or similar event under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary pursuant to any written contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, known to us, to which the Company or any Subsidiary is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any Subsidiary is subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any Subsidiary, or any applicable law, statute, rule, regulation, judgment, order, writ or decree, known to us, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any Subsidiary or any of their respective properties, assets or operations. (xiv) Neither the Company nor the Trust is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the 1940 Act. (xv) The Trust Agreement, the Indenture and the Guarantee have been duly qualified under the 1939 Act. (xvi) The Securities, the Common Securities, the Guarantee and the Corresponding Junior Subordinated Debentures conform as to legal matters in all material respects to the statements concerning them in the Prospectus. (xvii) The Company is exempt from the provisions of the Public Utility Holding Company Act of 1935, as amended (the "Public Utility Holding Company Act"), except Section 9(a)(2) thereof relating to the acquisition of securities of other public utility companies. We have participated in conferences with officers and other representatives of the Issuers, representatives of the Underwriters and representatives of the independent public A-3 accountants for the Issuers at which conferences the contents of the Prospectus and the Registration Statement and related matters were discussed and, although we have not independently verified, are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (except as otherwise indicated above), we advise you that, on the basis of the foregoing (relying as to materiality to the extent we deem appropriate upon the opinions of officers and other representatives of the Issuers), no facts have come to our attention that lead us to believe that the Registration Statement or any amendment thereto, at the time such Registration Statement or any such amendment became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of its date or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we express no comment with respect to the Forms T-1 or the financial statements, including the notes thereto, or any other financial or statistical data found in or derived from the internal accounting and other records of the Company and its Subsidiaries set forth or referred to in the Registration Statement or the Prospectus). In rendering such opinion, such counsel may rely as to matters of fact (but not as to legal conclusions), to the extent they deem proper, on certificates of responsible officers of the Trust, the Company and its Subsidiaries, representatives of the applicable trustees and public officials. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of Wisconsin and the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991). A-4 Exhibit B FORM OF OPINION OF DELAWARE COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(d) Capitalized terms used herein shall have the same definitions as set forth in the underwriting agreement (the "Agreement") to which this Exhibit B is attached. (i) The Trust is a duly formed and validly existing statutory business trust in good standing under the Business Trust Act of the State of Delaware with the business trust power and authority to enter into and perform its obligations under this Agreement, the Securities, the Common Securities and the Trust Agreement and to own property and conduct its business as described in the Prospectus. (ii) Under the Delaware Business Trust Act and the Trust Agreement, the execution and delivery by the Trust of this Agreement, and the performance by the Trust of its obligations hereunder, have been duly authorized by all necessary business trust action on the part of the Trust. (iii) The Trust Agreement constitutes a valid and binding obligation of the Company and the Trustees, enforceable against the Company and the Trustees, in accordance with its terms, subject, as to enforcement, to the effect upon the Trust Agreement of (a) bankruptcy, insolvency, moratorium, receivership, liquidation, fraudulent conveyance, reorganization and other similar laws relating to or affecting the remedies and rights of creditors, (b) general principles of equity (regardless of whether considered or applied in a proceeding in equity or at law), (c) considerations of public policy or the effect of applicable law relating to fiduciary duties, and (iv) principles of course of dealing or course of performance and standards of good faith, fair dealing, materiality or reasonableness that may be applied by a court to the exercise of rights or remedies. (iv) The Common Securities have been duly authorized for issuance by the Trust and upon issuance and delivery by the Trust to the Company against payment therefor as described in the Trust Agreement, will be duly and validly issued and, subject to the qualifications set forth herein, fully paid and non-assessable beneficial interests in the Trust; the issuance of the Common Securities is not subject to preemptive or other similar rights under the Trust Agreement or the Business Trust Act provide that such counsel may note that the holders of Common Securities may be required to make payment or provide indemnity or security as set forth in the Trust Agreement. (v) The Securities have been duly authorized for issuance by the Trust, and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and, subject to the qualifications set forth herein, fully paid B-1 and non-assessable beneficial interests in the Trust; the issuance of the Securities is not subject to preemptive or other similar rights under the Trust Agreement or the Business Trust Act; and the Securityholders will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; provided that such counsel need express no opinion as to any holder of a Security that is, was or becomes a named Trustee of the Trust. Such counsel may note that the holders of the Securities may be required to make payment or provide indemnity or security as set forth in the Trust Agreement. (vi) The issuance and sale by the Trust of the Securities and the Common Securities, the execution, delivery and performance by the Trust of the Agreement, the consummation by the Trust of the transactions contemplated therein and the compliance by the Trust with its obligations thereunder do not violate (a) any of the provisions of the Certificate of Trust of the Trust or the Trust Agreement or (b) any applicable Delaware law or Delaware administrative regulation. (vii) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware trustee as required by the Delaware Business Trust Act and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, no authorization, approval, consent or order of any Delaware court or Delaware governmental authority or Delaware agency is required to be obtained by the Trust solely as a result of the issuance and sale of the Securities, the consummation by the Trust of the transactions contemplated herein or the compliance by the Trust of its obligations hereunder, except such as have been obtained and such as may be required by the securities laws of the State of Delaware (as to which such counsel need express no opinion); (viii) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware trustee as required by the Delaware Business Trust Act and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, and assuming that the Trust is treated as a grantor trust for federal income tax purposes and that the holders of the Securities are viewed for federal income tax purposes as owners of either all of, or their liquidation and accrued but unpaid share of, the Corresponding Subordinated Debt Securities held by the Trust, the Securityholders (other than those holders of the Securities, or persons who are partners or S corporation shareholders for federal income tax purposes in such holders of Securities, who reside or are domiciled in the State of Delaware or who are otherwise subject to income taxation in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware (in rendering the opinion expressed in this paragraph (viii), B-2 such counsel need express no opinion concerning the securities laws of the State of Delaware). B-3 Annex A FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e) We are independent public accountants with respect to the Company within the meaning of the 1933 Act and the applicable published 1933 Act Regulations (i) in our opinion, the audited financial statements and the related financial statement schedules included or incorporated by reference in the Registration Statement and the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder; [ ] (ii) on the basis of procedures (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of the unaudited interim consolidated financial statements of the Company for the three month periods ended ____________ and ____________ , the three and six month periods ended ____________ and ____________ and the three and nine month periods ended ____________ and ____________, included or incorporated by reference in the Registration Statement and the Prospectus (collectively, the "10-Q Financials") , a reading of the unaudited interim consolidated financial statements of the Company for the _____-month periods ended ____________ and ____________, included in the Registration Statement and the Prospectus (the "____-month financials") , a reading of the latest available unaudited interim consolidated financial statements of the Company, a reading of the minutes of all meetings of the stockholders and directors of the Company and its subsidiaries and the ____________ and ____________ Committees of the Company's Board of Directors and any subsidiary committees since day after end of last audited period, inquiries of certain officials of the Company and its subsidiaries responsible for financial and accounting matters, a review of interim financial information in accordance with standards established by the American Institute of Certified Public Accountants in Statement on Auditing Standards No. 71, Interim Financial Information ("SAS 71"), with respect to the description of relevant periods and such other inquiries and procedures as may be specified in such letter, nothing came to our attention that caused us to believe that: (A) the 10-Q Financials incorporated by reference in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations applicable to unaudited financial statements included in Form 10-Q or any material modifications should be made to the 10-Q Financials incorporated by reference in the Registration Statement and the Prospectus for them to be in conformity with generally accepted accounting principles; (B) the _____-month financials included in the Registration Statement and the Prospectus do not comply as to form in all material respects with AA-1 the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations applicable to unaudited interim financial statements included in registration statements or any material modifications should be made to the _____-month financials included in the Registration Statement and the Prospectus for them to be in conformity with generally accepted accounting principles; (C) at ____________ and at a specified date not more than five days prior to the date of this Agreement, there was any change in the Shareholders' Equity of the Company and its subsidiaries or any decrease in the Total Current Assets of the Company and its subsidiaries or any increase in the Long -term Debt of the Company and its subsidiaries, in each case as compared with amounts shown in the latest balance sheet included in the Registration Statement, except in each case for changes, decreases or increases that the Registration Statement discloses have occurred or may occur; or (D) for the period from ____________ to ____________ and for the period from ____________ to a specified date not more than five days prior to the date of this Agreement, there was any decrease in Net Sales, Earnings Before Extraordinary Loss or Net Earnings, in each case as compared with the comparable period in the preceding year, except in each case for any decreases that the Registration Statement discloses have occurred or may occur; (iii) based upon the procedures set forth in clause (ii) above and a reading of the Selected Financial Data included in the Registration Statement and a reading of the financial statements from which such data were derived, nothing came to our attention that caused us to believe that the Selected Financial Data included in the Registration Statement do not comply as to form in all material respects with the disclosure requirements of Item 301 of Regulation S-K, that the amounts included in the Selected Financial Data are not in agreement with the corresponding amounts in the audited consolidated financial statements for the respective periods or that the financial statements not included in the Registration Statement from which certain of such data were derived are not in conformity with generally accepted accounting principles; (iv) we have compared the information in the Registration Statement under selected captions with the disclosure requirements of Regulation S-K and, on the basis of limited procedures specified herein, nothing came to our attention that caused us to believe that this information does not comply as to form in all material respects with the disclosure requirements of Items 302, 402 and 503(d), respectively, of Regulation S-K; (v) based upon the procedures set forth in clause (ii) above, a reading of the unaudited financial statements of the Company for the most recent period that AA-2 have not been included in the Registration Statement and a review of such financial statements in accordance with SAS No. 71, nothing came to our attention that caused us to believe that the unaudited amounts for Net Sales, Net Earnings or Shareholders' Equity for the most recent period do not agree with the amounts set forth in the unaudited consolidated financial statements for those periods or that such unaudited amounts were not determined on a basis substantially consistent with that of the corresponding amounts in the audited consolidated financial statements; [(vi) we are unable to and do not express any opinion on the Pro Forma Combining Statement of Operations (the "Pro Forma Statement") included in the Registration Statement or on the pro forma adjustments applied to the historical amounts included in the Pro Forma Statement; however, for purposes of this letter we have: (A) read the Pro Forma Statement; (B) performed a review in accordance with SAS No. 71 of the financial statements to which the pro forma adjustments were applied; (C) made inquiries of certain officials of the Company who have responsibility for financial and accounting matters about the basis for their determination of the pro forma adjustments and whether the Pro Forma Statement complies as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; (D) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the Pro Forma Statement; on the basis of such procedures and such other inquiries and procedures as specified herein, nothing came to our attention that caused us to believe that the Pro Forma Statement included in the Registration Statement does not comply as to form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements;] and (vii) in addition to the procedures referred to in clause (ii) above, we have performed other procedures, not constituting an audit, with respect to certain amounts, percentages, numerical data and financial information appearing in the Registration Statement, which are specified herein, and have compared certain of such items with, and have found such items to be in agreement with, the accounting and financial records of the Company. 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