Document/Exhibit Description Pages Size
1: 8-K Current Report 9 31K
2: EX-1 Underwriting Agreement 84 290K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 18 68K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 18 68K
5: EX-4 Instrument Defining the Rights of Security Holders 1 5K
6: EX-5 Opinion re: Legality 30 63K
7: EX-6 Opinion re: Discount on Capital Shares 27 63K
8: EX-7 Opinion re: Liquidation Preference 37 118K
9: EX-8 Opinion re: Tax Matters 6 21K
EXHIBIT (2)-1 CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
by and among
NORTHERN STATES POWER COMPANY,
WISCONSIN ENERGY CORPORATION,
NORTHERN POWER WISCONSIN CORP.
AND
WEC SUB CORP.
dated as of April 28, 1995
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGERS
SECTION 1.1 The Mergers............................... 1
SECTION 1.2 Effects of the Mergers.................... 2
SECTION 1.3 Effective Time of the Mergers............. 2
ARTICLE II
TREATMENT OF SHARES
SECTION 2.1 Effect of the Mergers on Capital Stock.... 3
SECTION 2.2 Dissenting Shares......................... 5
SECTION 2.3 Issuance of New Certificates.............. 5
ARTICLE III
THE CLOSING
SECTION 3.1 Closing................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NSP
SECTION 4.1 Organization and Qualification............ 8
SECTION 4.2 Subsidiaries.............................. 9
SECTION 4.3 Capitalization............................ 10
SECTION 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance................... 11
SECTION 4.5 Reports and Financial Statements.......... 13
SECTION 4.6 Absence of Certain Changes or Events...... 13
SECTION 4.7 Litigation................................ 14
SECTION 4.8 Registration Statement and Proxy
Statement............................... 14
SECTION 4.9 Tax Matters............................... 15
SECTION 4.10 Employee Matters; ERISA................... 17
SECTION 4.11 Environmental Protection.................. 19
SECTION 4.12 Regulation as a Utility................... 22
SECTION 4.13 Vote Required............................. 22
SECTION 4.14 Accounting Matters........................ 22
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Page
SECTION 4.15 Applicability of Certain Minnesota Law.... 23
SECTION 4.16 Opinion of Financial Advisor.............. 23
SECTION 4.17 Insurance................................. 23
SECTION 4.18 Ownership of WEC Common Stock............. 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WEC
SECTION 5.1 Organization and Qualification............ 24
SECTION 5.2 Subsidiaries.............................. 24
SECTION 5.3 Capitalization............................ 25
SECTION 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance................... 26
SECTION 5.5 Reports and Financial Statements.......... 28
SECTION 5.6 Absence of Certain Changes or Events...... 28
SECTION 5.7 Litigation................................ 29
SECTION 5.8 Registration Statement and Proxy
Statement............................... 29
SECTION 5.9 Tax Matters............................... 29
SECTION 5.10 Employee Matters; ERISA................... 31
SECTION 5.11 Environmental Protection.................. 34
SECTION 5.12 Regulation as a Utility................... 35
SECTION 5.13 Vote Required............................. 35
SECTION 5.14 Accounting Matters........................ 35
SECTION 5.15 Applicability of Certain Wisconsin Law.... 36
SECTION 5.16 Opinion of Financial Advisor.............. 36
SECTION 5.17 Insurance................................. 36
SECTION 5.18 Ownership of Old NSP Common Stock......... 36
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
SECTION 6.1 Covenants of the Parties.................. 36
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information..................... 46
SECTION 7.2 Joint Proxy Statement and Registration
Statement............................... 46
SECTION 7.3 Regulatory Matters........................ 48
SECTION 7.4 Shareholder Approval...................... 48
SECTION 7.5 Directors' and Officers' Indemnification.. 49
SECTION 7.6 Disclosure Schedules...................... 51
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Page
SECTION 7.7 Public Announcements...................... 51
SECTION 7.8 Rule 145 Affiliates....................... 52
SECTION 7.9 Employee Agreements and Workforce
Matters................................. 52
SECTION 7.10 Employee Benefit Plans.................... 53
SECTION 7.11 Stock Option and Other Stock Plans........ 55
SECTION 7.12 No Solicitations.......................... 56
SECTION 7.13 Company Board of Directors................ 57
SECTION 7.14 Company Officers.......................... 57
SECTION 7.15 Employment Contracts...................... 58
SECTION 7.16 Post-Merger Operations.................... 58
SECTION 7.17 Expenses.................................. 59
SECTION 7.18 Further Assurances........................ 59
SECTION 7.19 Utility Asset Transfer.................... 60
SECTION 7.20 Charter and By-law Amendments............. 60
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation
to Effect the Mergers................... 60
SECTION 8.2 Conditions to Obligation of WEC to
Effect the Mergers...................... 62
SECTION 8.3 Conditions to Obligation of NSP to
Effect the Mergers...................... 63
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination............................... 64
SECTION 9.2 Effect of Termination..................... 68
SECTION 9.3 Termination Fee; Expenses................. 68
SECTION 9.4 Amendment................................. 70
SECTION 9.5 Waiver.................................... 70
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival; Effect of Representations
and Warranties.......................... 71
SECTION 10.2 Brokers................................... 71
SECTION 10.3 Notices................................... 71
SECTION 10.4 Miscellaneous............................. 73
SECTION 10.5 Interpretation............................ 73
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Page
SECTION 10.6 Counterparts; Effect...................... 73
SECTION 10.7 Parties in Interest....................... 74
SECTION 10.8 Waiver of Jury Trial and Certain
Damages................................. 74
SECTION 10.9 Enforcement............................... 74
Exhibit A Form of WEC Stock Option Agreement
Exhibit B Form of NSP Stock Option Agreement
Exhibit 7.8 Form of Affiliate Agreement
Exhibit 7.10(a) Form of NSP Severance Plan
Exhibit 7.10(b) Form of WEC Severance Plan
Exhibit 7.13 Committees of the Board of Directors of
the Company
Exhibit 7.15.1 Form of Employment Agreement of James J.
Howard
Exhibit 7.15.2 Form of Employment Agreement of Richard A.
Abdoo
Exhibit 7.20(b) Form of Amended and Restated Articles of
Incorporation of New NSP
Exhibit 7.20(c) Form of Amended and Restated Articles of
Incorporation of WEC Sub
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Index of Defined Terms
Term Page
1935 Act................................................ 9
affiliate............................................... 22
Affiliate Agreement..................................... 52
Affiliated Employees.................................... 53
Agreement............................................... 1
Business Combination.................................... 65
Business Combination Proposal........................... 56
Cancelled Common Shares................................. 5
Cancelled Preferred Shares.............................. 6
Certificates............................................ 6
Closing................................................. 8
Closing Agreement....................................... 16
Closing Date............................................ 8
Code.................................................... 15
Committee............................................... 54
Common Certificates..................................... 5
Company................................................. 1
Company Common Stock.................................... 4
Company Replacement Plans............................... 54
Company Shares.......................................... 6
Company Stock Plan...................................... 54
Confidentiality Agreement............................... 46
control................................................. 23
Direct Subsidiary....................................... 9
Disclosure Schedules.................................... 51
Effective Time.......................................... 3
Environmental Claim..................................... 21
Environmental Laws...................................... 21
Environmental Permits................................... 20
ERISA................................................... 17
Exchange Act............................................ 13
Exchange Agent.......................................... 5
FERC.................................................... 13
Final Order............................................. 61
Foundation.............................................. 59
GAAP.................................................... 13
Governmental Authority.................................. 12
Hazardous Materials..................................... 21
HSR Act................................................. 48
Indemnified Liabilities................................. 49
Indemnified Party....................................... 49
Initial Termination Date................................ 64
IRS..................................................... 62
Joint Proxy/Registration Statement...................... 46
joint venture........................................... 9
MBCA.................................................... 2
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Term Page
Mergers................................................. 1
Mr. Abdoo............................................... 44
Mr. Howard.............................................. 44
New NSP................................................. 1
NRC..................................................... 13
NSP..................................................... 1
NSP Benefit Plans....................................... 17
NSP Common Stock........................................ 3
NSP Disclosure Schedule................................. 51
NSP Dissenting Shares................................... 5
NSP Effective Time...................................... 3
NSP Financial Statements................................ 13
NSP Incentive Plan...................................... 53
NSP Joint Venture....................................... 9
NSP Material Adverse Effect............................. 14
NSP Merger.............................................. 2
NSP Preferred Shares.................................... 6
NSP Preferred Stock..................................... 4
NSP Required Consents................................... 12
NSP Required Statutory Approvals........................ 12
NSP SEC Reports......................................... 13
NSP Shareholders' Approval.............................. 22
NSP Special Meeting..................................... 48
NSP Stock Awards........................................ 55
NSP Stock Option........................................ 55
NSP Stock Option Agreement.............................. 1
NSP Stock Plan.......................................... 53
NSP Subsidiary.......................................... 9
NSP Unrestricted Subsidiaries........................... 10
NSP-W................................................... 22
NYSE.................................................... 7
Old NSP Common Stock.................................... 3
Old NSP Preferred Stock................................. 4
PBGC.................................................... 18
PCBs.................................................... 21
Power Act............................................... 13
Preferred Certificates.................................. 6
Proxy Statement......................................... 14
Ratio................................................... 4
Registration Statement.................................. 14
Reincorporation Effective Time.......................... 3
Reincorporation Merger.................................. 1
Release................................................. 22
Representatives......................................... 46
SEC..................................................... 13
Securities Act.......................................... 13
Stock Plans............................................. 56
subsidiary.............................................. 8
Target Party............................................ 69
Task Force.............................................. 43
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Term Page
Tax Return.............................................. 15
Tax Ruling.............................................. 16
Taxes................................................... 15
Three Year Period....................................... 74
Violation............................................... 10
WBCL.................................................... 2
WEC..................................................... 1
WEC Article Amendments.................................. 60
WEC Benefit Plans....................................... 31
WEC Common Stock........................................ 4
WEC Disclosure Schedule................................. 51
WEC Financial Statements................................ 28
WEC Incentive Plan...................................... 53
WEC Joint Venture....................................... 24
WEC Material Adverse Effect............................. 28
WEC Preferred Stock..................................... 25
WEC Required Consents................................... 27
WEC Required Statutory Approvals........................ 27
WEC SEC Reports......................................... 28
WEC Shareholders' Approval.............................. 35
WEC Special Meeting..................................... 48
WEC Stock Option Agreement.............................. 1
WEC Stock Plan.......................................... 53
WEC Sub................................................. 1
WEC Subsidiary.......................................... 24
WEC Unrestricted Subsidiaries........................... 25
WEPCO................................................... 25
WEPCO Common Stock...................................... 25
WEPCO 6% Preferred Stock................................ 25
WEPCO $100 Par Value Serial Preferred Stock............. 25
WEPCO $25 Par Value Serial Preferred Stock.............. 25
WEPCO Preferred Stock................................... 25
WN...................................................... 35
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AGREEMENT AND PLAN OF MERGER, dated as of April 28,
1995 (this "Agreement"), by and among Northern States Power
Company, a Minnesota corporation ("NSP"), Wisconsin Energy
Corporation, a Wisconsin corporation ("WEC" and, after the Ef-
fective Time (as defined below), the "Company"), Northern Power
Wisconsin Corp., a Wisconsin corporation ("New NSP"), and WEC
Sub Corp., a Wisconsin corporation ("WEC Sub").
WHEREAS, NSP and WEC have determined to engage in a
business combination as peer firms in a merger of equals;
WHEREAS, in furtherance thereof, the respective
Boards of Directors of NSP, WEC, New NSP and WEC Sub have ap-
proved this Agreement and the transactions contemplated hereby
on the terms and conditions set forth in this Agreement (such
transactions referred to herein collectively as the "Mergers");
WHEREAS, the Board of Directors of WEC has approved
and WEC has executed an agreement with NSP in the form of Ex-
hibit A (the "WEC Stock Option Agreement") and the Board of
Directors of NSP has approved and NSP has executed an agreement
with WEC in the form of Exhibit B (the "NSP Stock Option
Agreement") whereby each of WEC and NSP, respectively, has
granted to the other an option to purchase shares of its common
stock on the terms and conditions provided in such agreement;
and
WHEREAS, for federal income tax purposes, it is in-
tended that the parties hereto and their respective stockhold-
ers will recognize no gain or loss for federal income tax pur-
poses as a result of the consummation of the Mergers;
NOW THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements con-
tained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 The Mergers. Upon the terms and subject
to the conditions of this Agreement:
(i) At the Reincorporation Effective Time (as de-
fined in Section 1.3), NSP shall be merged with and into
New NSP (the "Reincorporation Merger") in accordance with
the laws of the States of Minnesota and Wisconsin. New
NSP shall be the surviving corporation in the Reincorpo-
ration Merger and shall continue its corporate existence
under the laws of the State of Wisconsin. The effects and
the consequences of the Reincorporation Merger shall be as
set forth in Section 1.2(a). Throughout this Agreement,
the term "NSP" shall refer to NSP and/or New NSP, as the
context requires.
(ii) At the NSP Effective Time (as defined in Sec-
tion 1.3), WEC Sub shall be merged with and into New NSP
(the "NSP Merger") in accordance with the laws of the
State of Wisconsin. New NSP shall be the surviving cor-
poration in the NSP Merger and shall continue its corpo-
rate existence under the laws of the State of Wisconsin.
The effects and the consequences of the NSP Merger shall
be as set forth in Section 1.2(b).
Section 1.2 Effects of the Mergers. (a) At the
Reincorporation Effective Time, (i) the articles of incorpora-
tion of New NSP, as in effect immediately prior to the Rein-
corporation Effective Time, shall be the articles of incorpo-
ration of the surviving corporation in the Reincorporation
Merger until thereafter amended as provided by law and such
articles of incorporation, and (ii) the by-laws of New NSP, as
in effect immediately prior to the Reincorporation Effective
Time, shall be the by-laws of the surviving corporation in the
Reincorporation Merger until thereafter amended as provided by
law, the articles of incorporation of the surviving corporation
in the Reincorporation Merger and such by-laws. Subject to the
foregoing, the additional effects of the Reincorporation Merger
shall be as provided in the applicable provisions of the Min-
nesota Business Corporation Act (the "MBCA") and the Wisconsin
Business Corporation Law (the "WBCL").
(b) At the NSP Effective Time, (i) the articles of
incorporation of New NSP, as in effect immediately prior to the
NSP Effective Time, shall be the articles of incorporation of
the surviving corporation in the NSP Merger until thereafter
amended as provided by law and such articles of incorporation,
and (ii) the by-laws of New NSP, as in effect immediately prior
to the NSP Effective Time, shall be the by-laws of the surviv-
ing corporation in the NSP Merger until thereafter amended as
provided by law, the articles of incorporation of the surviving
corporation in the NSP Merger and such by-laws. Subject to the
foregoing, the additional effects of the NSP Merger shall be as
provided in the applicable provisions of the WBCL.
Section 1.3 Effective Time of the Mergers. On the
Closing Date (as defined in Section 3.1), (a) with respect to
the Reincorporation Merger, articles of merger complying with
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the requirements of the WBCL and the MBCA shall be executed by
NSP and New NSP and shall be filed by New NSP with the Secre-
tary of State of each of the States of Wisconsin and Minnesota,
and (b) with respect to the NSP Merger, articles of merger
complying with the requirements of the WBCL shall be executed
by New NSP and WEC Sub and shall be filed by New NSP with the
Secretary of State of the State of Wisconsin. The Reincorpo-
ration Merger shall become effective at the time specified in
the articles of merger filed with respect to the Reincorpo-
ration Merger (the "Reincorporation Effective Time"). The NSP
Merger shall become effective at the time specified in the ar-
ticles of merger filed with respect to the NSP Merger (the "NSP
Effective Time" or the "Effective Time"). The effective time
specified in the articles of merger to be filed with respect to
the Reincorporation Merger shall be prior to the effective time
specified in the articles of merger filed with respect to the
NSP Merger.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Mergers on Capital Stock.
(a) At the Reincorporation Effective Time, by virtue of the
Reincorporation Merger and without any action on the part of
any holder of any capital stock of NSP or New NSP:
(i) Cancellation of New NSP Stock. Each share of
Common Stock, par value $2.50 per share, of New NSP (the
"NSP Common Stock") that is owned by NSP shall be can-
celled and shall cease to exist.
(ii) Treatment of NSP Common Stock. Each issued and
outstanding share of Common Stock, par value $2.50 per
share, of NSP (the "Old NSP Common Stock"), other than NSP
Dissenting Shares (as defined in Section 2.2), shall be
cancelled and converted into the right to receive one
fully paid and, subject to Section 180.0622(2)(b) of the
WBCL, as judicially interpreted, non-assessable share of
NSP Common Stock. Upon such cancellation, all such shares
of Old NSP Common Stock shall cease to exist, and each
holder of a certificate formerly representing any such
shares of Old NSP Common Stock shall cease to have any
rights with respect thereto, except the right to receive
the shares of NSP Common Stock to be issued in consider-
ation therefor and, following the NSP Merger, the right to
receive the shares of Company Common Stock (as defined in
Section 2.1(b)(ii)) to be issued in consideration therefor
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upon the surrender of such certificate in accordance with
Section 2.3.
(iii) Treatment of NSP Preferred Stock. Each issued
and outstanding share of Cumulative Preferred Stock, par
value $100.00 per share, of NSP (the "Old NSP Preferred
Stock"), other than NSP Dissenting Shares, shall be can-
celled and converted into the right to receive one fully
paid and, subject to Section 180.0622(2)(b) of the WBCL,
as judicially interpreted, non-assessable share of Cumu-
lative Preferred Stock, par value $100.00 per share, of
New NSP ("NSP Preferred Stock") with identical rights
(including dividend rates) and designations to the can-
celled share of Old NSP Preferred Stock. Upon such can-
cellation, all such shares of Old NSP Preferred Stock
shall cease to exist, and each holder of a certificate
representing any such shares of Old NSP Preferred Stock
shall cease to have any rights with respect thereto, ex-
cept the right to receive the shares of NSP Preferred
Stock to be issued in consideration therefor upon the
surrender of such certificate in accordance with Sec-
tion 2.3.
(b) At the NSP Effective Time, by virtue of the NSP
Merger and without any action on the part of any holder of any
capital stock of New NSP or WEC Sub:
(i) Cancellation of Certain NSP Stock. Each share
of NSP Common Stock and each share of NSP Preferred Stock
that is owned by New NSP as treasury stock, by subsidiar-
ies of New NSP or by WEC or any of its subsidiaries shall
be cancelled and cease to exist.
(ii) Treatment of NSP Common Stock. Each issued and
outstanding share of NSP Common Stock (other than shares
cancelled pursuant to Section 2.1(b)(i) and NSP Dissenting
Shares) shall be cancelled and converted into the right to
receive 1.626 (the "Ratio") fully paid and, subject to
Section 180.0622(2)(b) of the WBCL, as judicially inter-
preted, non-assessable shares of Common Stock, par value
$.01 per share, of WEC (the "WEC Common Stock" and, with
respect to any period after the Effective Time, the "Com-
pany Common Stock"). Upon such cancellation, all such
Shares of NSP Common Stock shall cease to exist, and each
holder of a certificate formerly representing any such
shares shall cease to have any rights with respect there-
to, except the right to receive the shares of Company
Common Stock to be issued in consideration therefor upon
the surrender of such certificate in accordance with Sec-
tion 2.3.
-4-
(iii) No Change in NSP Preferred Stock. Each issued
and outstanding share of NSP Preferred Stock (other than
shares cancelled pursuant to Section 2.1(b)(i)) shall be
unchanged as a result of the NSP Merger and shall remain
outstanding thereafter.
(iv) Treatment of WEC Sub Stock. Each issued and
outstanding share of Common Stock, par value $.01 per
share, of WEC Sub shall be cancelled and converted into
one fully paid and, subject to Section 180.0622(2)(b) of
the WBCL, as judicially interpreted, non-assessable share
of NSP Common Stock.
Section 2.2 Dissenting Shares. Shares of Old NSP
Common Stock and Old NSP Preferred Stock held by any holder
entitled to relief as a dissenting shareholder under Section
471 of the MBCA (the "NSP Dissenting Shares") shall not become
the right to receive NSP Common Stock or NSP Preferred Stock,
as the case may be, in the Reincorporation Merger or, in the
case of Old NSP Common Stock, into the right to receive Company
Common Stock in the NSP Merger, but shall be cancelled and
converted into such consideration as may be due with respect to
such shares pursuant to the applicable provisions of the MBCA,
unless and until the right of such holder to receive fair cash
value for such NSP Dissenting Shares terminates in accordance
with Section 473 of the MBCA. If such right is terminated
otherwise than by the purchase of such shares by NSP, then such
shares shall cease to be NSP Dissenting Shares and shall rep-
resent the right to receive Company Common Stock, as provided
in Section 2.1(b), or NSP Preferred Stock, as provided in
Section 2.1(a).
Section 2.3 Issuance of New Certificates.
(a) Deposit with Exchange Agent. As soon as prac-
ticable after the Effective Time, the Company shall deposit
with such bank or trust company mutually agreeable to WEC and
NSP (the "Exchange Agent"), certificates representing shares of
Company Common Stock and NSP Preferred Stock required to effect
the issuances referred to in Section 2.1, together with cash
payable in respect of fractional shares pursuant to Section
2.3(d).
(b) Issuance Procedures. As soon as practicable
after the Effective Time, the Exchange Agent shall mail (x) to
each holder of record of a certificate or certificates (the
"Common Certificates") which immediately prior to the Reincor-
poration Effective Time represented outstanding shares of Old
NSP Common Stock (the "Cancelled Common Shares") that were
cancelled and became instead the right to receive shares of
-5-
Company Common Stock (the "Company Shares") pursuant to Sec-
tion 2.1 and (y) to each holder of record of a certificate or
certificates (the "Preferred Certificates" and together with
the Common Certificates, the "Certificates") which immediately
prior to the Reincorporation Effective Time represented out-
standing shares of Old NSP Preferred Stock (the "Cancelled
Preferred Shares") that were cancelled and became instead the
right to receive NSP Preferred Stock (the "NSP Preferred
Shares") pursuant to Section 2.1(a)(iii), (i) a letter of
transmittal (which shall specify that delivery shall be ef-
fected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the Ex-
change Agent) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates
representing Company Shares (or NSP Preferred Shares, as the
case may be). Upon surrender of a Certificate to the Exchange
Agent for cancellation (or to such other agent or agents as may
be appointed by agreement of NSP and WEC), together with a duly
executed letter of transmittal and such other documents as the
Exchange Agent shall require, the holder of such Certificate
shall be entitled to receive a certificate representing that
number of whole Company Shares (or NSP Preferred Shares, as the
case may be) which such holder has the right to receive pursu-
ant to the provisions of this Article II. In the event of a
transfer of ownership of Cancelled Common Shares (or Cancelled
Preferred Shares) which is not registered in the transfer
records of NSP, a certificate representing the proper number of
Company Shares (or NSP Preferred Shares, as the case may be)
may be issued to a transferee if the Certificate representing
such Cancelled Common Shares (or Cancelled Preferred Shares, as
the case may be) is presented to the Exchange Agent, accom-
panied by all documents required to evidence and effect such
transfer and by evidence satisfactory to the Exchange Agent
that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.3, each Certifi-
cate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the
certificate representing Company Shares (or NSP Preferred
Shares, as the case may be) and cash in lieu of any fractional
shares of Company Common Stock as contemplated by this Sec-
tion 2.3.
(c) Distributions with Respect to Unsurrendered
Shares. No dividends or other distributions declared or made
after the Effective Time with respect to Company Shares or NSP
Preferred Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate
with respect to the Company Shares or NSP Preferred Shares
represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section
-6-
2.3(d) until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of unclaimed
property, escheat and other applicable laws, following sur-
render of any such Certificate, there shall be paid to the
record holder of the certificates representing whole Company
Shares or NSP Preferred Shares issued in consideration there-
for, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of
Company Common Stock to which such holder is entitled pursuant
to Section 2.3(d) and the amount of dividends or other distri-
butions with a record date after the Effective Time theretofore
paid with respect to such whole Company Shares or NSP Preferred
Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date sub-
sequent to surrender payable with respect to such whole Company
Shares or NSP Preferred Shares, as the case may be.
(d) No Fractional Securities. Notwithstanding any
other provision of this Agreement, no certificates or scrip
representing fractional shares of Company Common Stock shall be
issued upon the surrender for exchange of Certificates and such
fractional shares shall not entitle the owner thereof to vote
or to any other rights of a holder of Company Common Stock. A
holder of NSP Common Stock who would otherwise have been en-
titled to a fractional share of Company Common Stock shall be
entitled to receive a cash payment in lieu of such fractional
share in an amount equal to the product of such fraction mul-
tiplied by the average of the last reported sales price, regu-
lar way, per share of Old NSP Common Stock on the New York
Stock Exchange ("NYSE") Composite Tape for the ten business
days prior to and including the last business day on which Old
NSP Common Stock was traded on the NYSE, without any interest
thereon.
(e) Closing of Transfer Books. From and after the
NSP Effective Time the stock transfer books of NSP shall be
closed and no transfer of any capital stock of NSP shall
thereafter be made. If, after the Effective Time, Certificates
are presented to the Company, they shall be cancelled and ex-
changed for certificates representing the appropriate number of
Company Shares or NSP Preferred Shares, as the case may be, as
provided in this Section 2.3.
(f) Termination of Exchange Agent. Any certificates
representing Company Shares or NSP Preferred Shares deposited
with the Exchange Agent pursuant to Section 2.3(a) and not ex-
changed within one year after the Effective Time pursuant to
this Section 2.3 shall be returned by the Exchange Agent to the
Company, which shall thereafter act as Exchange Agent. All
-7-
funds held by the Exchange Agent for payment to the holders of
unsurrendered Certificates and unclaimed at the end of one year
from the Effective Time shall be returned to the Company, after
which time any holder of unsurrendered Certificates shall look
as a general creditor only to the Company for payment of such
funds to which such holder may be due, subject to applicable
law. The Company shall not be liable to any person for such
shares or funds delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Mergers
(the "Closing") shall take place at the offices of Wachtell,
Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York
at 10:00 A.M., local time, on the second business day imme-
diately following the date on which the last of the conditions
set forth in Article VIII hereof is fulfilled or waived, or at
such other time and date and place as NSP and WEC shall mutu-
ally agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NSP
NSP represents and warrants to WEC as follows:
Section 4.1 Organization and Qualification. Except
as set forth in Section 4.1 of the NSP Disclosure Schedule (as
defined in Section 7.6(ii)), each of NSP and each of the NSP
Subsidiaries (as defined below) is a corporation duly orga-
nized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, has all
requisite corporate power and authority, and has been duly au-
thorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent owned,
leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and proper-
ties makes such qualification necessary. As used in this
Agreement, (a) the term "subsidiary" of a person shall mean any
corporation or other entity (including partnerships and other
business associations) of which at least a majority of the
outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or
-8-
similar members of the governing body of such corporation or
entity shall at the time be held, directly or indirectly, by
such person, (b) the term "NSP Subsidiary" shall mean those of
the subsidiaries of NSP identified as NSP Subsidiaries in Sec-
tion 4.2 of the NSP Disclosure Schedule and (c) the term "Di-
rect Subsidiary" shall be deemed to mean NSP Subsidiaries or
WEC Subsidiaries (as defined in Section 5.1), as the case may
be.
Section 4.2 Subsidiaries. Section 4.2 of the NSP
Disclosure Schedule sets forth a description as of the date
hereof, of all subsidiaries and joint ventures of NSP, includ-
ing (a) the name of each such entity and NSP's interest there-
in, and (b) as to each NSP Subsidiary and NSP Joint Venture (as
defined below), a brief description of the principal line or
lines of business conducted by each such entity. Except as set
forth in Section 4.2 of the NSP Disclosure Schedule, none of
the NSP Subsidiaries is a "public utility company", a "holding
company", a "subsidiary company" or an "affiliate" of any pub-
lic utility company within the meaning of Section 2(a)(5),
2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), respectively.
Except as set forth in Section 4.2 of the NSP Disclosure
Schedule, all of the issued and outstanding shares of capital
stock of each NSP Subsidiary are validly issued, fully paid,
nonassessable (subject to Section 180.0622(2)(b) of the WBCL,
as judicially interpreted, in the case of New NSP and NSP-W (as
defined in Section 4.12)) and free of preemptive rights, and
are owned, directly or indirectly, by NSP free and clear of any
liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restric-
tions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instru-
ment or other agreement, obligating any such NSP Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating it
to grant, extend or enter into any such agreement or commit-
ment. As used in this Agreement, (a) the term "joint venture"
of a person shall mean any corporation or other entity (in-
cluding partnerships and other business associations) that is
not a subsidiary of such person, in which such person or one or
more of its subsidiaries owns an equity interest, other than
equity interests held for passive investment purposes which are
less than 5% of any class of the outstanding voting securities
or equity of any such entity and (b) the term "NSP Joint Ven-
ture" shall mean those of the joint ventures of NSP or any NSP
Subsidiary identified as a NSP Joint Venture in Section 4.2 of
the NSP Disclosure Schedule. With respect to the subsidiaries
-9-
and joint ventures of NSP that are not NSP Subsidiaries (the
"NSP Unrestricted Subsidiaries"): (i) except as set forth in
Section 4.2 of the NSP Disclosure Schedule, neither NSP nor any
NSP Subsidiary is liable for any obligations or liabilities of
any NSP Unrestricted Subsidiary; (ii) neither NSP nor any NSP
Subsidiary is obligated to make any loans or capital contribu-
tions to, or to undertake any guarantees or other obligations
with respect to, NSP Unrestricted Subsidiaries, except for
loans, capital contributions, guarantees and other obligations
not in excess of $75,000,000 in the aggregate to all such NSP
Unrestricted Subsidiaries; and (iii) the aggregate book value
as of December 31, 1994, of NSP's investment in the NSP Unre-
stricted Subsidiaries was not in excess of $300,000,000.
Section 4.3 Capitalization. The authorized capital
stock of NSP consists of 160,000,000 shares of Old NSP Common
Stock, and 7,000,000 shares of Old NSP Preferred Stock. As of
the close of business on April 20, 1995, there were issued and
outstanding 67,275,241 shares of Old NSP Common Stock and
2,400,000 shares of Old NSP Preferred Stock, consisting of:
275,000 shares of $3.60 series; 150,000 shares of $4.08 series;
175,000 shares of $4.10 series; 200,000 shares of $4.11 series;
100,000 shares of $4.16 series; 150,000 shares of $4.56 series;
200,000 shares of $6.80 series; 200,000 shares of $7.00 series;
300,000 shares of Adjustable Rate Series A; and 650,000 shares
of Adjustable Rate Series B. All of the issued and outstanding
shares of the capital stock of NSP are, and any shares of Old
NSP Common Stock issued pursuant to the NSP Stock Option
Agreement will be, validly issued, fully paid, nonassessable
and free of preemptive rights. Except as set forth in Section
4.3 of the NSP Disclosure Schedule, as of the date hereof,
there are no outstanding subscriptions, options, calls, con-
tracts, voting trusts, proxies or other commitments, under-
standings, restrictions, arrangements, rights or warrants, in-
cluding any right of conversion or exchange under any out-
standing security, instrument or other agreement, obligating
NSP or any of the NSP Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of
the capital stock of NSP, or obligating NSP to grant, extend or
enter into any such agreement or commitment, other than under
the NSP Stock Option Agreement. There are no outstanding stock
appreciation rights of NSP which were not granted in tandem
with a related stock option and no outstanding limited stock
appreciation rights or other rights to redeem for cash options
or warrants of NSP.
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Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. NSP has all requisite power and au-
thority to enter into this Agreement and the NSP Stock Option
Agreement, and, subject to the applicable NSP Shareholders'
Approval (as defined in Section 4.13) and the applicable NSP
Required Statutory Approvals (as defined in Section 4.4(c)), to
consummate the transactions contemplated hereby or thereby.
The execution and delivery of this Agreement and the NSP Stock
Option Agreement and the consummation by NSP of the transac-
tions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of NSP, subject
to obtaining the applicable NSP Shareholders' Approval. Each
of this Agreement and the NSP Stock Option Agreement has been
duly and validly executed and delivered by NSP and, assuming
the due authorization, execution and delivery hereof and
thereof by the other signatories hereto and thereto, consti-
tutes the valid and binding obligation of NSP enforceable
against it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Sec-
tion 4.4(b) of the NSP Disclosure Schedule, the execution and
delivery of this Agreement and the NSP Stock Option Agreement
by NSP do not, and the consummation of the transactions con-
templated hereby or thereby will not, in any material respect,
violate, conflict with, or result in a material breach of any
provision of, or constitute a material default (with or without
notice or lapse of time or both) under, or result in the ter-
mination or modification of, or accelerate the performance re-
quired by, or result in a right of termination, cancellation,
or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any material lien,
security interest, charge or encumbrance upon any of the prop-
erties or assets of NSP or any of the NSP Subsidiaries or NSP
Joint Ventures (any such violation, conflict, breach, default,
right of termination, modification, cancellation or accelera-
tion, loss or creation, a "Violation" with respect to NSP, such
term when used in Article V having a correlative meaning with
respect to WEC) pursuant to any provisions of (i) the articles
of incorporation, by-laws or similar governing documents of NSP
or any of the NSP Subsidiaries or the NSP Joint Ventures, (ii)
subject to obtaining the NSP Required Statutory Approvals and
the receipt of the NSP Shareholders' Approval, any statute,
law, ordinance, rule, regulation, judgment, decree, order, in-
junction, writ, permit or license of any Governmental Authority
(as defined in Section 4.4(c)) applicable to NSP or any of the
NSP Subsidiaries or the NSP Joint Ventures or any of their re-
spective properties or assets or (iii) subject to obtaining the
third-party consents set forth in Section 4.4(b) of the NSP
-11-
Disclosure Schedule (the "NSP Required Consents") any material
note, bond, mortgage, indenture, deed of trust, license, fran-
chise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which NSP or any of the
NSP Subsidiaries or the NSP Joint Ventures is a party or by
which it or any of its properties or assets may be bound or
affected.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or
approval of, any court, federal, state, local or foreign gov-
ernmental or regulatory body (including a stock exchange or
other self-regulatory body) or authority (each, a "Governmental
Authority") is necessary for the execution and delivery of this
Agreement or the NSP Stock Option Agreement by NSP or the con-
summation by NSP of the transactions contemplated hereby or
thereby, except as described in Section 4.4(c) of the NSP Dis-
closure Schedule (the "NSP Required Statutory Approvals", it
being understood that references in this Agreement to "obtain-
ing" such NSP Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such no-
tices; obtaining such authorizations, consents or approvals;
and having such waiting periods expire as are necessary to
avoid a violation of law).
(d) Compliance. Except as set forth in Section
4.4(d), Section 4.10 or Section 4.11 of the NSP Disclosure
Schedule, or as disclosed in the NSP SEC Reports (as defined in
Section 4.5) filed prior to the date hereof, neither NSP nor
any of the NSP Subsidiaries nor, to the knowledge of NSP, any
NSP Joint Venture is in material violation of, is under inves-
tigation with respect to any material violation of, or has been
given notice or been charged with any material violation of,
any law, statute, order, rule, regulation, ordinance or judg-
ment (including, without limitation, any applicable environ-
mental law, ordinance or regulation) of any Governmental Au-
thority. Except as set forth in Section 4.4(d) of the NSP
Disclosure Schedule or in Section 4.11 of the NSP Disclosure
Schedule, NSP and the NSP Subsidiaries and NSP Joint Ventures
have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct
their businesses as presently conducted in all material re-
spects. Except as set forth in Section 4.4(d) of the NSP Dis-
closure Schedule, NSP and each of the NSP Subsidiaries is not
in material breach or violation of or in material default in
the performance or observance of any term or provision of, and
no event has occurred which, with lapse of time or action by a
third party, could result in a material default under, (i) its
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articles of incorporation or by-laws or (ii) any material con-
tract, commitment, agreement, indenture, mortgage, loan agree-
ment, note, lease, bond, license, approval or other instrument
to which it is a party or by which it is bound or to which any
of its property is subject.
Section 4.5 Reports and Financial Statements. The
filings required to be made by NSP and the NSP Subsidiaries
since January 1, 1990 under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the 1935 Act, the Fed-
eral Power Act (the "Power Act"), the Atomic Energy Act and
applicable state laws and regulations have been filed with the
Securities and Exchange Commission (the "SEC"), the Federal
Energy Regulatory Commission (the "FERC"), the Nuclear Regula-
tory Commission ("NRC") or the appropriate state public utili-
ties commission, as the case may be, including all forms,
statements, reports, agreements (oral or written) and all doc-
uments, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the ap-
propriate statute and the rules and regulations thereunder.
NSP has made available to WEC a true and complete copy of each
report, schedule, registration statement and definitive proxy
statement filed by NSP with the SEC since January 1, 1992 (as
such documents have since the time of their filing been amend-
ed, the "NSP SEC Reports"). As of their respective dates, the
NSP SEC Reports did not contain any untrue statement of a ma-
terial fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and
unaudited interim financial statements of NSP included in the
NSP SEC Reports (collectively, the "NSP Financial Statements")
have been prepared in accordance with generally accepted ac-
counting principles applied on a consistent basis ("GAAP")
(except as may be indicated therein or in the notes thereto and
except with respect to unaudited statements as permitted by
Form 10-Q of the SEC) and fairly present the financial position
of NSP as of the dates thereof and the results of its opera-
tions and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to
normal, recurring audit adjustments. True, accurate and com-
plete copies of the Restated Articles of Incorporation and by-
laws of NSP, as in effect on the date hereof, are included (or
incorporated by reference) in the NSP SEC Reports.
Section 4.6 Absence of Certain Changes or Events.
Except as disclosed in the NSP SEC Reports filed prior to the
-13-
date hereof or as set forth in Section 4.6 of the NSP Disclo-
sure Schedule, from December 31, 1994, NSP and each of the NSP
Subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice and there has
not been, and no fact or condition exists which would have or,
insofar as reasonably can be foreseen, could have, a material
adverse effect on the business, assets, financial condition,
results of operations or prospects of NSP and its subsidiaries
taken as a whole (a "NSP Material Adverse Effect").
Section 4.7 Litigation. Except as disclosed in the
NSP SEC Reports filed prior to the date hereof or as set forth
in Section 4.7, Section 4.9 or Section 4.11 of the NSP Disclo-
sure Schedule, (i) there are no material claims, suits, actions
or proceedings, pending or, to the knowledge of NSP, threat-
ened, nor are there, to the knowledge of NSP, any material in-
vestigations or reviews pending or threatened against, relating
to or affecting NSP or any of the NSP Subsidiaries, (ii) there
have not been any significant developments since December 31,
1994 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (iii) there are no
material judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency, in-
strumentality or authority or any arbitrator applicable to NSP
or any of the NSP Subsidiaries.
Section 4.8 Registration Statement and Proxy State-
ment. None of the information supplied or to be supplied by or
on behalf of NSP for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed with the
SEC by the Company in connection with the issuance of shares of
Company Common Stock in the Mergers (the "Registration State-
ment") will, at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements therein not mis-
leading and (ii) the joint proxy statement, in definitive form,
relating to the meetings of NSP and WEC shareholders to be held
in connection with the Mergers (the "Proxy Statement") will
not, at the dates mailed to shareholders and at the times of
the meetings of shareholders to be held in connection with the
Mergers, 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, in light
of the circumstances under which they are made, not misleading.
The Registration Statement and the Proxy Statement will comply
as to form in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and regula-
tions thereunder.
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Section 4.9 Tax Matters. "Taxes", as used in this
Agreement, means any federal, state, county, local or foreign
taxes, charges, fees, levies, or other assessments, including
all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, es-
timated, stamp, custom duties, severance or withholding taxes
or charges imposed by any governmental entity, and includes any
interest and penalties (civil or criminal) on or additions to
any such taxes. "Tax Return", as used in this Agreement, means
a report, return or other information required to be supplied
to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any
group of entities that includes NSP or any of its subsidiaries,
or WEC or any of its subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the NSP Dis-
closure Schedule:
(a) Filing of Timely Tax Returns. NSP and each of
the NSP Subsidiaries have filed (or there has been filed
on its behalf) all material Tax Returns required to be
filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, com-
plete and correct and filed on a timely basis.
(b) Payment of Taxes. NSP and each of the NSP Sub-
sidiaries have, within the time and in the manner pre-
scribed by law, paid all Taxes that are currently due and
payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. NSP and the NSP Subsidiaries have
established on their books and records reserves adequate
to pay all Taxes and reserves for deferred income taxes in
accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the as-
sets of NSP or any of the NSP Subsidiaries except liens
for Taxes not yet due.
(e) Withholding Taxes. NSP and each of the NSP
Subsidiaries have complied in all material respects with
the provisions of the Internal Revenue Code of 1986, as
amended (the "Code") relating to the withholding of Taxes,
as well as similar provisions under any other laws, and
have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper
governmental authorities all amounts required.
-15-
(f) Extensions of Time for Filing Tax Returns.
Neither NSP nor any of the NSP Subsidiaries has requested
any extension of time within which to file any Tax Return,
which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither NSP
nor any of the NSP Subsidiaries has executed any out-
standing waivers or comparable consents regarding the ap-
plication of the statute of limitations with respect to
any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The
statute of limitations for the assessment of all Taxes has
expired for all applicable Tax Returns of NSP and each of
the NSP Subsidiaries or those Tax Returns have been exam-
ined by the appropriate taxing authorities for all periods
through the date hereof, and no deficiency for any Taxes
has been proposed, asserted or assessed against NSP or any
of the NSP Subsidiaries that has not been resolved and
paid in full.
(i) Audit, Administrative and Court Proceedings. No
audits or other administrative proceedings or court pro-
ceedings are presently pending with regard to any Taxes or
Tax Returns of NSP or any of the NSP Subsidiaries.
(j) Powers of Attorney. No power of attorney cur-
rently in force has been granted by NSP or any of the NSP
Subsidiaries concerning any Tax matter.
(k) Tax Rulings. Neither NSP nor any of the NSP
Subsidiaries has received a Tax Ruling (as defined below)
or entered into a Closing Agreement (as defined below)
with any taxing authority that would have a continuing
adverse effect after the Closing Date. "Tax Ruling", as
used in this Agreement, shall mean a written ruling of a
taxing authority relating to Taxes. "Closing Agreement",
as used in this Agreement, shall mean a written and le-
gally binding agreement with a taxing authority relating
to Taxes.
(l) Availability of Tax Returns. NSP has made
available to WEC complete and accurate copies of (i) all
Tax Returns, and any amendments thereto, filed by NSP or
any of the NSP Subsidiaries, (ii) all audit reports re-
ceived from any taxing authority relating to any Tax Re-
turn filed by NSP or any of the NSP Subsidiaries and (iii)
any Closing Agreements entered into by NSP or any of the
NSP Subsidiaries with any taxing authority.
-16-
(m) Tax Sharing Agreements. Neither NSP nor any NSP
Subsidiary is a party to any agreement relating to allo-
cating or sharing of Taxes.
(n) Code Section 280G. Neither NSP nor any of the
NSP Subsidiaries is a party to any agreement, contract, or
arrangement that could result, on account of the transac-
tions contemplated hereunder, separately or in the aggre-
gate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code.
(o) Liability for Others. None of NSP or any of the
NSP Subsidiaries has any liability for Taxes of any person
other than NSP and the NSP Subsidiaries (i) under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor,
(ii) by contract, or (iii) otherwise.
Section 4.10 Employee Matters; ERISA. Except as set
forth in Section 4.10 of the NSP Disclosure Schedule:
(a) Benefit Plans. Section 4.10(a) of the NSP Dis-
closure Schedule contains a true and complete list of each em-
ployee benefit plan covering employees, former employees or
directors of NSP and each of the NSP Subsidiaries or their
beneficiaries, or providing benefits to such persons in respect
of services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and any severance or change in con-
trol agreement (collectively, the "NSP Benefit Plans"). For
the purposes of this Section 4.10 only, the term "NSP" shall be
deemed to include the predecessors of such company.
(b) Contributions. All material contributions and
other payments required to be made by NSP or any of the NSP
Subsidiaries to any NSP Benefit Plan (or to any person pursuant
to the terms thereof) have been made or the amount of such
payment or contribution obligation has been reflected in the
NSP Financial Statements.
(c) Qualification; Compliance. Each of the NSP
Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be
so qualified, and, to the best knowledge of NSP, no circum-
stances exist that are reasonably expected by NSP to result in
the revocation of any such determination. NSP is in compliance
in all material respects with, and each of the NSP Benefit
Plans is and has been operated in all material respects in
compliance with, all applicable laws, rules and regulations
-17-
governing such plan, including, without limitation, ERISA and
the Code. Each NSP Benefit Plan intended to provide for the
deferral of income, the reduction of salary or other compensa-
tion, or to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or other
laws, rules and regulations required to provide such income tax
benefits.
(d) Liabilities. With respect to the NSP Benefit
Plans, individually and in the aggregate, no event has oc-
curred, and, to the best knowledge of NSP, there does not now
exist any condition or set of circumstances, that could subject
NSP or any of the NSP Subsidiaries to any material liability
arising under the Code, ERISA or any other applicable law (in-
cluding, without limitation, any liability to any such plan or
the Pension Benefit Guaranty Corporation (the "PBGC")), or un-
der any indemnity agreement to which NSP is a party, excluding
liability for benefit claims and funding obligations payable in
the ordinary course.
(e) Welfare Plans. None of the NSP Benefit Plans
that are "welfare plans", within the meaning of Section 3(1) of
ERISA, provides for any retiree benefits, other than continua-
tion coverage required to be provided under Section 4980B of
the Code or Part 6 of Title I of ERISA.
(f) Documents Made Available. NSP has made avail-
able to WEC a true and correct copy of each collective bar-
gaining agreement to which NSP or any of the NSP Subsidiaries
is a party or under which NSP or any of the NSP Subsidiaries
has obligations and, with respect to each NSP Benefit Plan,
where applicable, (i) such plan and summary plan description,
(ii) the most recent annual report filed with the IRS, (iii)
each related trust agreement, insurance contract, service pro-
vider or investment management agreement (including all amend-
ments to each such document), (iv) the most recent determina-
tion of the IRS with respect to the qualified status of such
NSP Benefit Plan, and (v) the most recent actuarial report or
valuation.
(g) Payments Resulting from Mergers. (i) The con-
summation or announcement of any transaction contemplated by
this Agreement will not (either alone or upon the occurrence of
any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due
from NSP or any of the NSP Subsidiaries to any officer, em-
ployee, former employee or director thereof or to the trustee
under any "rabbi trust" or similar arrangement, or (B) benefit
under any NSP Benefit Plan being established or becoming ac-
celerated, vested or payable and (ii) neither NSP nor any of
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the NSP Subsidiaries is a party to (A) any management, employ-
ment, deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bonus or
other contract for personal services with any officer, director
or employee, (B) any consulting contract with any person who
prior to entering into such contract was a director or officer
of NSP, or (C) any plan, agreement, arrangement or understand-
ing similar to any of the foregoing.
(h) Labor Agreements. As of the date hereof, nei-
ther NSP nor any of the NSP Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with
any union or labor organization. To the best knowledge of NSP,
as of the date hereof, there is no current union representation
question involving employees of NSP or any of the NSP Subsid-
iaries, nor does NSP know of any activity or proceeding of any
labor organization (or representative thereof) or employee
group to organize any such employees. Except as disclosed in
the NSP SEC Reports filed prior to the date hereof or in Sec-
tion 4.10(h) of the NSP Disclosure Schedule, (i) there is no
unfair labor practice, employment discrimination or other ma-
terial complaint against NSP or any of the NSP Subsidiaries
pending, or to the best knowledge of NSP, threatened, (ii)
there is no strike or lockout or material dispute, slowdown or
work stoppage pending, or to the best knowledge of NSP,
threatened, against or involving NSP, and (iii) there is no
proceeding, claim, suit, action or governmental investigation
pending or, to the best knowledge of NSP, threatened, in re-
spect of which any director, officer, employee or agent of NSP
or any of the NSP Subsidiaries is or may be entitled to claim
indemnification from NSP or such NSP Subsidiary pursuant to
their respective articles of incorporation or by-laws or as
provided in the indemnification agreements listed in Section
4.10(h) of the NSP Disclosure Schedule.
Section 4.11 Environmental Protection. Except as
set forth in Section 4.11 of the NSP Disclosure Schedule or in
the NSP SEC Reports filed prior to the date hereof:
(a) Compliance. NSP and each of the NSP Subsidiar-
ies is in material compliance with all applicable Environmental
Laws (as defined in Section 4.11(g)(ii)); and neither NSP nor
any of the NSP Subsidiaries has received any communication
(written or oral), from any person or Governmental Authority
that alleges that NSP or any of the NSP Subsidiaries is not in
such compliance with applicable Environmental Laws.
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(b) Environmental Permits. NSP and each of the NSP
Subsidiaries has obtained or has applied for all material en-
vironmental, health and safety permits and governmental autho-
rizations (collectively, the "Environmental Permits") necessary
for the construction of their facilities or the conduct of
their operations, and all such Environmental Permits are in
good standing or, where applicable, a renewal application has
been timely filed and is pending agency approval, and NSP and
the NSP Subsidiaries are in material compliance with all terms
and conditions of the Environmental Permits.
(c) Environmental Claims. To the best knowledge of
NSP, there is no material Environmental Claim (as defined in
Section 4.11(g)(i)) pending (i) against NSP or any of the NSP
Subsidiaries or NSP Joint Ventures, (ii) against any person or
entity whose liability for any Environmental Claim NSP or any
of the NSP Subsidiaries has or may have retained or assumed
either contractually or by operation of law, or (iii) against
any real or personal property or operations which NSP or any of
the NSP Subsidiaries owns, leases or manages, in whole or in
part.
(d) Releases. NSP has no knowledge of any material
Releases (as defined in Section 4.11(g)(iv)) of any Hazardous
Material (as defined in Section 4.11(g)(iii)) that would be
reasonably likely to form the basis of any material Environ-
mental Claim against NSP or any of the NSP Subsidiaries, or
against any person or entity whose liability for any material
Environmental Claim NSP or any of the NSP Subsidiaries has or
may have retained or assumed either contractually or by opera-
tion of law.
(e) Predecessors. NSP has no knowledge, with re-
spect to any predecessor of NSP or any of the NSP Subsidiaries,
of any material Environmental Claim pending or threatened, or
of any Release of Hazardous Materials that would be reasonably
likely to form the basis of any material Environmental Claim.
(f) Disclosure. To NSP's best knowledge, NSP has
disclosed to WEC all material facts which NSP reasonably be-
lieves form the basis of a material Environmental Claim arising
from (i) the cost of NSP pollution control equipment currently
required or known to be required in the future; (ii) current
NSP remediation costs or NSP remediation costs known to be re-
quired in the future; or (iii) any other environmental matter
affecting NSP.
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(g) As used in this Agreement:
(i) "Environmental Claim" means any and all admin-
istrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation
(written or oral) by any person or entity (including any
Governmental Authority) alleging potential liability (in-
cluding, without limitation, potential responsibility for
or liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, reme-
dial costs, natural-resources damages, property damages,
personal injuries or penalties) arising out of, based on
or resulting from (A) the presence, or Release or threat-
ened Release into the environment, of any Hazardous Mate-
rials at any location, whether or not owned, operated,
leased or managed by NSP or any of the NSP Subsidiaries or
NSP Joint Ventures (for purposes of this Section 4.11), or
by WEC or any of the WEC Subsidiaries or WEC Joint Ven-
tures (for purposes of Section 5.11); or (B) circumstances
forming the basis of any violation, or alleged violation,
of any Environmental Law; or (C) any and all claims by any
third party seeking damages, contribution, indemnifica-
tion, cost recovery, compensation or injunctive relief
resulting from the presence or Release of any Hazardous
Materials.
(ii) "Environmental Laws" means all federal, state,
local laws, rules and regulations relating to pollution,
the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsur-
face strata) or protection of human health as it relates
to the environment including, without limitation, laws and
regulations relating to Releases or threatened Releases of
Hazardous Materials, or otherwise relating to the manu-
facture, processing, distribution, use, treatment, stor-
age, disposal, transport or handling of Hazardous Mate-
rials.
(iii) "Hazardous Materials" means (a) any petroleum
or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formalde-
hyde foam insulation, and transformers or other equipment
that contain dielectric fluid containing polychlorinated
biphenyls ("PCBs"); and (b) any chemicals, materials or
substances which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "re-
stricted hazardous wastes", "toxic substances", "toxic
-21-
pollutants", or words of similar import, under any Envi-
ronmental Law; and (c) any other chemical, material, sub-
stance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a ju-
risdiction in which NSP or any of the NSP Subsidiaries or
NSP Joint Ventures operates (for purposes of this Section
4.11) or in which WEC or any of the WEC Subsidiaries or
WEC Joint Ventures operates (for purposes of Section
5.11).
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dis-
persal, leaching or migration into the atmosphere, soil,
surface water, groundwater or property.
Section 4.12 Regulation as a Utility. NSP is regu-
lated as a public utility in the States of Minnesota, North
Dakota and South Dakota and in no other state. Northern States
Power Company, a Wisconsin corporation ("NSP-W"), is regulated
as a public utility in the States of Wisconsin and Michigan and
in no other state. Except as set forth in Section 4.12 of the
NSP Disclosure Schedule, neither NSP nor any "subsidiary com-
pany" or "affiliate" of NSP is subject to regulation as a pub-
lic utility or public service company (or similar designation)
by any other state in the United States or any foreign country.
NSP is an exempt holding company under Section 3(a)(2) of the
1935 Act.
Section 4.13 Vote Required. The approval of the
Mergers by a majority of the votes entitled to be cast by all
holders of Old NSP Common Stock and Old NSP Preferred Stock
voting together as a single class (the "NSP Shareholders' Ap-
proval") is the only vote of the holders of any class or series
of the capital stock of NSP or any of its subsidiaries required
to approve this Agreement, the Mergers and the other transac-
tions contemplated hereby, provided that the approval of
shareholders of NSP may be required for the repurchase of
shares of Old NSP Common Stock pursuant to Section 7(a) of the
NSP Stock Option Agreement under circumstances where Subdivi-
sion 3 of Section 302A.553 of the MBCA would be applicable.
Section 4.14 Accounting Matters. Neither NSP nor,
to NSP's best knowledge, any of its affiliates has taken or
agreed to take any action that would prevent the Company from
accounting for the transactions to be effected pursuant to this
Agreement as a pooling of interests in accordance with GAAP and
applicable SEC regulations. As used in this Agreement (except
as specifically otherwise defined), the term "affiliate", ex-
cept where otherwise defined herein, shall mean, as to any
person, any other person which directly or indirectly controls,
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or is under common control with, or is controlled by, such
person. As used in this definition, "control" (including, with
its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or
policies (whether through ownership of securities or partner-
ship or other ownership interests, by contract or otherwise).
Section 4.15 Applicability of Certain Minnesota Law.
Assuming the representation and warranty of WEC made in Section
5.18 is correct, none of the control share acquisition provi-
sions of Section 302A.671 of the MBCA, the business combination
provisions of Sections 302A.673 and 675 of the MBCA or any
similar provisions of the MBCA (or, to the best knowledge of
NSP, any other similar state statute) or the Restated Articles
of Incorporation or by-laws of NSP, are applicable to the
transactions contemplated by this Agreement, including the
granting or exercise of the NSP Stock Option Agreement.
Section 4.16 Opinion of Financial Advisor. NSP has
received the opinion of Goldman, Sachs & Co., dated April 28,
1995, to the effect that, as of the date thereof, the Ratio is
fair from a financial point of view to the holders of Old NSP
Common Stock.
Section 4.17 Insurance. Except as set forth in
Section 4.17 of the NSP Disclosure Schedule, NSP and each of
the NSP Subsidiaries is, and has been continuously since Janu-
ary 1, 1990, insured with financially responsible insurers in
such amounts and against such risks and losses as are customary
in all material respects for companies conducting the business
as conducted by NSP and the NSP Subsidiaries during such time
period. Except as set forth in Section 4.17 of the NSP Dis-
closure Schedule, neither NSP nor any of the NSP Subsidiaries
has received any notice of cancellation or termination with
respect to any material insurance policy of NSP or any of the
NSP Subsidiaries. The insurance policies of NSP and each of
the NSP Subsidiaries are valid and enforceable policies in all
material respects.
Section 4.18 Ownership of WEC Common Stock. Except
pursuant to the terms of the WEC Stock Option Agreement, NSP
does not "beneficially own" (as such term is defined for pur-
poses of Section 13(d) of the Exchange Act) any shares of WEC
Common Stock.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WEC
WEC represents and warrants to NSP as follows:
Section 5.1 Organization and Qualification. Except
as set forth in Section 5.1 of the WEC Disclosure Schedule (as
defined in Section 7.6(i)), each of WEC and each of the WEC
Subsidiaries (as defined below) is a corporation duly orga-
nized, validly existing and in active status under the laws of
its jurisdiction of incorporation or organization, has all
requisite corporate power and authority, and has been duly au-
thorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent owned,
leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and proper-
ties makes such qualification necessary. As used in this
Agreement, the term: (a) "WEC Subsidiary" shall mean those of
the subsidiaries of WEC identified as WEC Subsidiaries in Sec-
tion 5.2 of the WEC Disclosure Schedule; and (b) "WEC Joint
Venture" shall mean those of the joint ventures of WEC or any
WEC Subsidiary identified as a WEC Joint Venture in Section 5.2
of the WEC Disclosure Schedule.
Section 5.2 Subsidiaries. Section 5.2 of the WEC
Disclosure Schedule sets forth a description as of the date
hereof of all subsidiaries and joint ventures of WEC, including
(a) the name of each such entity and WEC's interest therein,
and (b) as to each WEC Subsidiary and WEC Joint Venture, a
brief description of the principal line or lines of business
conducted by each such entity. Except as set forth in Section
5.2 of the WEC Disclosure Schedule, none of the WEC Subsidiar-
ies is a "public utility company", a "holding company", a
"subsidiary company" or an "affiliate" of any public utility
company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8)
or 2(a)(11) of the 1935 Act, respectively. Except as set forth
in Section 5.2 of the WEC Disclosure Schedule, all of the is-
sued and outstanding shares of capital stock of each WEC Sub-
sidiary are validly issued, fully paid, nonassessable (subject
to Section 180.0622(2)(b) of the WBCL, as judicially inter-
preted) and free of preemptive rights, and are owned directly
or indirectly by WEC free and clear of any liens, claims, en-
cumbrances, security interests, equities, charges and options
of any nature whatsoever and there are no outstanding sub-
scriptions, options, calls, contracts, voting trusts, proxies
or other commitments, understandings, restrictions, arrange-
ments, rights or warrants, including any right of conversion or
-24-
exchange under any outstanding security, instrument or other
agreement, obligating any such WEC Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend
or enter into any such agreement or commitment. With respect
to the subsidiaries and joint ventures of WEC that are not WEC
Subsidiaries (the "WEC Unrestricted Subsidiaries"): (i) except
as set forth in Section 5.2 of the WEC Disclosure Schedule,
neither WEC nor any WEC Subsidiary is liable for any obliga-
tions or liabilities of any WEC Unrestricted Subsidiary; (ii)
neither WEC nor any WEC Subsidiary is obligated to make any
loans or capital contributions to, or to undertake any guaran-
tees or other obligations with respect to, WEC Unrestricted
Subsidiaries, except for loans, capital contributions, guaran-
tees and other obligations not in excess of $35 million in the
aggregate to all such WEC Unrestricted Subsidiaries; and (iii)
the aggregate book value as of December 31, 1994, of WEC's in-
vestment in the WEC Unrestricted Subsidiaries was not in excess
of $120 million.
Section 5.3 Capitalization. The authorized capital
stock of WEC consists of 325,000,000 shares of WEC Common
Stock, and 15,000,000 shares of Preferred Stock, par value $.01
per share (the "WEC Preferred Stock"). As of the close of
business on April 20, 1995, there were issued and outstanding
109,415,713 shares of WEC Common Stock and no shares of WEC
Preferred Stock. All of the issued and outstanding shares of
the capital stock of WEC are, and any WEC Common Stock issued
pursuant to the WEC Stock Option Agreement will be, validly is-
sued, fully paid, nonassessable (subject to Section
180.0622(2)(b) of the WBCL, as judicially interpreted) and free
of preemptive rights. The authorized capital stock of Wiscon-
sin Electric Power Company, a Wisconsin corporation ("WEPCO"),
consists of 65,000,000 shares of Common Stock, par value $10.00
per share (the "WEPCO Common Stock"), 45,000 shares of 6% Pre-
ferred Stock, par value $100.00 per share (the "WEPCO 6% Pre-
ferred Stock"); 2,286,500 shares of Serial Preferred Stock, par
value $100.00 per share (the "WEPCO $100 Par Value Serial Pre-
ferred Stock") and 5,000,000 shares of Serial Preferred Stock,
par value $25.00 per share (the "WEPCO $25 Par Value Serial
Preferred Stock" and, together with the WEPCO 6% Preferred
Stock and the WEPCO $100 Par Value Serial Preferred Stock, the
"WEPCO Preferred Stock"). As of the close of business on April
20, 1995, there were issued and outstanding 33,289,327 shares
of WEPCO Common Stock, 44,508 shares of the WEPCO 6% Preferred
Stock, 260,000 shares of the WEPCO $100 Par Value Serial Pre-
ferred Stock, 3.60% Series, and no shares of the WEPCO $25 Par
Value Serial Preferred Stock. Except as set forth in Section
5.3 of the WEC Disclosure Schedule, as of the date hereof,
-25-
there are no outstanding subscriptions, options, calls, con-
tracts, voting trusts, proxies or other commitments, under-
standings, restrictions, arrangements, rights or warrants, in-
cluding any right of conversion or exchange under any out-
standing security, instrument or other agreement, obligating
WEC or any of the WEC Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of
the capital stock of WEC, or obligating WEC to grant, extend or
enter into any such agreement or commitment, other than under
the WEC Stock Option Agreement. There are no outstanding stock
appreciation rights of WEC which were not granted in tandem
with a related stock option and no outstanding limited stock
appreciation rights or other rights to redeem for cash options
or warrants of WEC.
Section 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. WEC has all requisite power and au-
thority to enter into this Agreement and the WEC Stock Option
Agreement, and, subject to the applicable WEC Shareholders'
Approval (as defined in Section 5.13) and the applicable WEC
Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby or thereby.
The execution and delivery of this Agreement and the WEC Stock
Option Agreement and the consummation by WEC of the transac-
tions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of WEC, subject
to obtaining the applicable WEC Shareholders' Approval. Each
of this Agreement and the WEC Stock Option Agreement has been
duly and validly executed and delivered by WEC and, assuming
the due authorization, execution and delivery hereof and
thereof by the other signatories hereto and thereto, consti-
tutes the valid and binding obligation of WEC enforceable
against it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Sec-
tion 5.4(b) of the WEC Disclosure Schedule, the execution and
delivery of this Agreement and the WEC Stock Option Agreement
by WEC do not, and the consummation of the transactions con-
templated hereby or thereby will not, result in a material
Violation pursuant to any provisions of (i) the articles of
incorporation, by-laws or similar governing documents of WEC or
any of the WEC Subsidiaries or the WEC Joint Ventures, (ii)
subject to obtaining the WEC Required Statutory Approvals and
the receipt of the WEC Shareholders' Approval, any statute,
law, ordinance, rule, regulation, judgment, decree, order, in-
junction, writ, permit or license of any Governmental Authority
applicable to WEC or any of the WEC Subsidiaries or the WEC
Joint Ventures or any of their respective properties or assets
-26-
or (iii) subject to obtaining the third-party consents set
forth in Section 5.4(b) of the WEC Disclosure Schedule (the
"WEC Required Consents") any material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, conces-
sion, contract, lease or other instrument, obligation or
agreement of any kind to which WEC or any of the WEC Subsid-
iaries or the WEC Joint Ventures is a party or by which it or
any of its properties or assets may be bound or affected.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or
approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement or the WEC Stock Op-
tion Agreement by WEC or the consummation by WEC of the trans-
actions contemplated hereby or thereby, except as described in
Section 5.4(c) of the WEC Disclosure Schedule (the "WEC Re-
quired Statutory Approvals", it being understood that refer-
ences in this Agreement to "obtaining" such WEC Required Stat-
utory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authoriza-
tions, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
(d) Compliance. Except as set forth in Section
5.4(d), Section 5.10 or Section 5.11 of the WEC Disclosure
Schedule, or as disclosed in the WEC SEC Reports (as defined in
Section 5.5) filed prior to the date hereof, neither WEC nor
any of the WEC Subsidiaries nor, to the knowledge of WEC, any
WEC Joint Venture, is in material violation of, is under in-
vestigation with respect to any material violation of, or has
been given notice or been charged with any material violation
of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable envi-
ronmental law, ordinance or regulation) of any Governmental
Authority. Except as set forth in Section 5.4(d) of the WEC
Disclosure Schedule or in Section 5.11 of the WEC Disclosure
Schedule, WEC and the WEC Subsidiaries and WEC Joint Ventures
have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct
their businesses as presently conducted in all material re-
spects. Except as set forth in Section 5.4(d) of the WEC Dis-
closure Schedule, WEC and each of the WEC Subsidiaries is not
in material breach or violation of or in material default in
the performance or observance of any term or provision of, and
no event has occurred which, with lapse of time or action by a
third party, could result in a material default under, (i) its
articles of incorporation or by-laws or (ii) any material con-
tract, commitment, agreement, indenture, mortgage, loan agree-
ment, note, lease, bond, license, approval or other instrument
-27-
to which it is a party or by which it is bound or to which any
of its property is subject.
Section 5.5 Reports and Financial Statements. The
filings required to be made by WEC and the WEC Subsidiaries
since January 1, 1990 under the Securities Act, the Exchange
Act, the 1935 Act, the Power Act, the Atomic Energy Act and
applicable state laws and regulations have been filed with the
SEC, the FERC, the NRC or the appropriate state public utili-
ties commission, as the case may be, including all forms,
statements, reports, agreements (oral or written) and all doc-
uments, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the ap-
propriate statute and the rules and regulations thereunder.
WEC has made available to NSP a true and complete copy of each
report, schedule, registration statement and definitive proxy
statement filed by WEC with the SEC since January 1, 1992 (as
such documents have since the time of their filing been amend-
ed, the "WEC SEC Reports"). As of their respective dates, the
WEC SEC Reports did not contain any untrue statement of a ma-
terial fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and
unaudited interim financial statements of WEC included in the
WEC SEC Reports (collectively, the "WEC Financial Statements")
have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with re-
spect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present the financial position of WEC as of the
dates thereof and the results of its operations and cash flows
for the periods then ended, subject, in the case of the unau-
dited interim financial statements, to normal, recurring audit
adjustments. True, accurate and complete copies of the Re-
stated Articles of Incorporation and by-laws of WEC, as in ef-
fect on the date hereof, are included (or incorporated by ref-
erence) in the WEC SEC Reports.
Section 5.6 Absence of Certain Changes or Events.
Except as disclosed in the WEC SEC Reports filed prior to the
date hereof or as set forth in Section 5.6 of the WEC Disclo-
sure Schedule, from December 31, 1994, WEC and each of the WEC
Subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice and there has
not been, and no fact or condition exists which would have or,
insofar as reasonably can be foreseen, could have, a material
adverse effect on the business, assets, financial condition,
results of operations or prospects of WEC and its subsidiaries
taken as a whole (an "WEC Material Adverse Effect").
-28-
Section 5.7 Litigation. Except as disclosed in the
WEC SEC Reports filed prior to the date hereof or as set forth
in Section 5.7, Section 5.9 or Section 5.11 of the WEC Disclo-
sure Schedule, (i) there are no material claims, suits, actions
or proceedings, pending or, to the knowledge of WEC, threat-
ened, nor are there, to the knowledge of WEC, any material in-
vestigations or reviews pending or threatened against, relating
to or affecting WEC or any of the WEC Subsidiaries, (ii) there
have not been any significant developments since December 31,
1994 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (iii) there are no
material judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency, in-
strumentality or authority or any arbitrator applicable to WEC
or any of the WEC Subsidiaries.
Section 5.8 Registration Statement and Proxy State-
ment. None of the information supplied or to be supplied by or
on behalf of WEC for inclusion or incorporation by reference in
(i) the Registration Statement will, at the time the Registra-
tion Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue state-
ment of a material fact or omit to state any material fact re-
quired to be stated therein or necessary to make the statements
therein not misleading and (ii) the Proxy Statement will not,
at the dates mailed to shareholders and at the times of the
meetings of shareholders to be held in connection with the
Mergers, 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, in light
of the circumstances under which they are made, not misleading.
The Registration Statement and the Proxy Statement will comply
as to form in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and regula-
tions thereunder.
Section 5.9 Tax Matters. Except as set forth in
Section 5.9 of the WEC Disclosure Schedule:
(a) Filing of Timely Tax Returns. WEC and each of
the WEC Subsidiaries have filed (or there has been filed
on its behalf) all material Tax Returns required to be
filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, com-
plete and correct and filed on a timely basis.
(b) Payment of Taxes. WEC and each of the WEC Sub-
sidiaries have, within the time and in the manner pre-
scribed by law, paid all Taxes that are currently due and
-29-
payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. WEC and the WEC Subsidiaries have
established on their books and records reserves adequate
to pay all Taxes and reserves for deferred income taxes in
accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the as-
sets of WEC or any of the WEC Subsidiaries except liens
for Taxes not yet due.
(e) Withholding Taxes. WEC and each of the WEC
Subsidiaries have complied in all material respects with
the provisions of the Code relating to the withholding of
Taxes, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by
law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns.
Neither WEC nor any of the WEC Subsidiaries has requested
any extension of time within which to file any Tax Return,
which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither WEC
nor any of the WEC Subsidiaries has executed any out-
standing waivers or comparable consents regarding the ap-
plication of the statute of limitations with respect to
any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The
statute of limitations for the assessment of all Taxes has
expired for all applicable Tax Returns of WEC and each of
the WEC Subsidiaries or those Tax Returns have been exam-
ined by the appropriate taxing authorities for all periods
through the date hereof, and no deficiency for any Taxes
has been proposed, asserted or assessed against WEC or any
of the WEC Subsidiaries that has not been resolved and
paid in full.
(i) Audit, Administrative and Court Proceedings. No
audits or other administrative proceedings or court pro-
ceedings are presently pending with regard to any Taxes or
Tax Returns of WEC or any of the WEC Subsidiaries.
(j) Powers of Attorney. No power of attorney cur-
rently in force has been granted by WEC or any of the WEC
Subsidiaries concerning any Tax matter.
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(k) Tax Rulings. Neither WEC nor any of the WEC
Subsidiaries has received a Tax Ruling or entered into a
Closing Agreement with any taxing authority that would
have a continuing adverse effect after the Closing Date.
(l) Availability of Tax Returns. WEC has made
available to NSP complete and accurate copies of (i) all
Tax Returns, and any amendments thereto, filed by WEC or
any of the WEC Subsidiaries, (ii) all audit reports re-
ceived from any taxing authority relating to any Tax Re-
turn filed by WEC or any of the WEC Subsidiaries and (iii)
any Closing Agreements entered into by WEC or any of the
WEC Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither WEC nor any WEC
Subsidiary is a party to any agreement relating to allo-
cating or sharing of Taxes.
(n) Code Section 280G. Neither WEC nor any of the
WEC Subsidiaries is a party to any agreement, contract, or
arrangement that could result, on account of the transac-
tions contemplated hereunder, separately or in the aggre-
gate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code.
(o) Liability for Others. None of WEC or any of the
WEC Subsidiaries has any liability for Taxes of any person
other than WEC and the WEC Subsidiaries (i) under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor,
(ii) by contract, or (iii) otherwise.
Section 5.10 Employee Matters; ERISA. Except as set
forth in Section 5.10 of the WEC Disclosure Schedule:
(a) Benefit Plans. Section 5.10(a) of the WEC Dis-
closure Schedule contains a true and complete list of each
employee benefit plan covering employees, former employees
or directors of WEC and each of the WEC Subsidiaries or
their beneficiaries, or providing benefits to such persons
in respect of services provided to any such entity, in-
cluding, but not limited to, any employee benefit plans
within the meaning of Section 3(3) of ERISA and any sev-
erance or change in control agreement (collectively, the
"WEC Benefit Plans"). For the purposes of this Section
5.10 only, the term "WEC" shall be deemed to include the
predecessors of such company.
(b) Contributions. All material contributions and
other payments required to be made by WEC or any of the
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WEC Subsidiaries to any WEC Benefit Plan (or to any person
pursuant to the terms thereof) have been made or the
amount of such payment or contribution obligation has been
reflected in the WEC Financial Statements.
(c) Qualification; Compliance. Each of the WEC
Benefit Plans intended to be "qualified" within the mean-
ing of Section 401(a) of the Code has been determined by
the IRS to be so qualified, and, to the best knowledge of
WEC, no circumstances exist that are reasonably expected
by WEC to result in the revocation of any such determina-
tion. WEC is in compliance in all material respects with,
and each of the WEC Benefit Plans is and has been operated
in all material respects in compliance with, all appli-
cable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code. Each
WEC Benefit Plan intended to provide for the deferral of
income, the reduction of salary or other compensation, or
to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or
other laws, rules and regulations required to provide such
income tax benefits.
(d) Liabilities. With respect to the WEC Benefit
Plans, individually and in the aggregate, no event has
occurred, and, to the best knowledge of WEC, there does
not now exist any condition or set of circumstances, that
could subject WEC or any of the WEC Subsidiaries to any
material liability arising under the Code, ERISA or any
other applicable law (including, without limitation, any
liability to any such plan or the PBGC), or under any in-
demnity agreement to which WEC is a party, excluding li-
ability for benefit claims and funding obligations payable
in the ordinary course.
(e) Welfare Plans. None of the WEC Benefit Plans
that are "welfare plans", within the meaning of Section
3(1) of ERISA, provides for any retiree benefits, other
than continuation coverage required to be provided under
Section 4980B of the Code or Part 6 of Title I of ERISA.
(f) Documents Made Available. WEC has made avail-
able to NSP a true and correct copy of each collective
bargaining agreement to which WEC or any of the WEC Sub-
sidiaries is a party or under which WEC or any of the WEC
Subsidiaries has obligations and, with respect to each WEC
Benefit Plan, where applicable, (i) such plan and summary
plan description, (ii) the most recent annual report filed
with the IRS, (iii) each related trust agreement, insur-
ance contract, service provider or investment management
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agreement (including all amendments to each such docu-
ment), (iv) the most recent determination of the IRS with
respect to the qualified status of such WEC Benefit Plan,
and (v) the most recent actuarial report or valuation.
(g) Payments Resulting from Mergers. (i) The con-
summation or announcement of any transaction contemplated
by this Agreement will not (either alone or upon the oc-
currence of any additional or further acts or events) re-
sult in any (A) payment (whether of severance pay or oth-
erwise) becoming due from WEC or any of the WEC Subsid-
iaries to any officer, employee, former employee or di-
rector thereof or to the trustee under any "rabbi trust"
or similar arrangement, or (B) benefit under any WEC Ben-
efit Plan being established or becoming accelerated, ves-
ted or payable and (ii) neither WEC nor any of the WEC
Subsidiaries is a party to (A) any management, employment,
deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bo-
nus or other contract for personal services with any of-
ficer, director or employee, (B) any consulting contract
with any person who prior to entering into such contract
was a director or officer of WEC, or (C) any plan, agree-
ment, arrangement or understanding similar to any of the
foregoing.
(h) Labor Agreements. As of the date hereof, nei-
ther WEC nor any of the WEC Subsidiaries is a party to any
collective bargaining agreement or other labor agreement
with any union or labor organization. To the best knowl-
edge of WEC, as of the date hereof, there is no current
union representation question involving employees of WEC
or any of the WEC Subsidiaries, nor does WEC know of any
activity or proceeding of any labor organization (or rep-
resentative thereof) or employee group to organize any
such employees. Except as disclosed in the WEC SEC Re-
ports filed prior to the date hereof or in Section 5.10(h)
of the WEC Disclosure Schedule, (i) there is no unfair
labor practice, employment discrimination or other mate-
rial complaint against WEC or any of the WEC Subsidiaries
pending, or to the best knowledge of WEC, threatened, (ii)
there is no strike, or lockout or material dispute, slow-
down or work stoppage pending, or to the best knowledge of
WEC, threatened, against or involving WEC, and (iii) there
is no proceeding, claim, suit, action or governmental in-
vestigation pending or, to the best knowledge of WEC,
threatened, in respect of which any director, officer,
employee or agent of WEC or any of the WEC Subsidiaries is
or may be entitled to claim indemnification from WEC or
such WEC Subsidiary pursuant to their respective articles
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of incorporation or by-laws or as provided in the indem-
nification agreements listed in Section 5.10(h) of the WEC
Disclosure Schedule.
Section 5.11 Environmental Protection. Except as
set forth in Section 5.11 of the WEC Disclosure Schedule or in
the WEC SEC Reports filed prior to the date hereof:
(a) Compliance. WEC and each of the WEC Subsidiar-
ies is in material compliance with all applicable Envi-
ronmental Laws; and neither WEC nor any of the WEC Sub-
sidiaries has received any communication (written or
oral), from any person or Governmental Authority that al-
leges that WEC or any of the WEC Subsidiaries is not in
such compliance with applicable Environmental Laws.
(b) Environmental Permits. WEC and each of the WEC
Subsidiaries has obtained or has applied for all the En-
vironmental Permits necessary for the construction of
their facilities or the conduct of their operations, and
all such Environmental Permits are in good standing or,
where applicable, a renewal application has been timely
filed and is pending agency approval, and WEC and the WEC
Subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits.
(c) Environmental Claims. To the best knowledge of
WEC, there is no material Environmental Claim pending (i)
against WEC or any of the WEC Subsidiaries or WEC Joint
Ventures, (ii) against any person or entity whose liab-
ility for any Environmental Claim WEC or any of the WEC
Subsidiaries has or may have retained or assumed either
contractually or by operation of law, or (iii) against any
real or personal property or operations which WEC or any
of the WEC Subsidiaries owns, leases or manages, in whole
or in part.
(d) Releases. WEC has no knowledge of any material
Releases of any Hazardous Material that would be reason-
ably likely to form the basis of any material Environmen-
tal Claim against WEC or any of the WEC Subsidiaries, or
against any person or entity whose liability for any ma-
terial Environmental Claim WEC or any of the WEC Subsid-
iaries has or may have retained or assumed either con-
tractually or by operation of law.
(e) Predecessors. WEC has no knowledge, with re-
spect to any predecessor of WEC or any of the WEC Sub-
sidiaries, of any material Environmental Claim pending or
threatened, or of any Release of Hazardous Materials that
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would be reasonably likely to form the basis of any mate-
rial Environmental Claim.
(f) Disclosure. To WEC's best knowledge, WEC has
disclosed to NSP all material facts which WEC reasonably
believes form the basis of a material Environmental Claim
arising from (i) the cost of WEC pollution control equip-
ment currently required or known to be required in the
future; (ii) current WEC remediation costs or WEC reme-
diation costs known to be required in the future; or (iii)
any other environmental matter affecting WEC.
Section 5.12 Regulation as a Utility. WEC is regu-
lated as a public utility holding company under Section 196.795
of the Wisconsin Statutes. WEPCO is regulated as a public
utility in the States of Wisconsin and Michigan and in no other
state. Wisconsin Natural Gas Company, a Wisconsin corporation
("WN"), is regulated as a public utility in the State of Wis-
consin and in no other state. Neither WEC nor any "subsidiary
company" or "affiliate" of WEC is subject to regulation as a
public utility or public service company (or similar designa-
tion) by any other state in the United States or any foreign
country. WEC is an exempt holding company under Section
3(a)(1) of the 1935 Act.
Section 5.13 Vote Required. The approval of the
issuance of Company Common Stock in connection with the NSP
Merger by a majority of the votes entitled to be cast by the
holders of the shares of WEC Common Stock represented at the
meeting and entitled to vote thereon (in which the total vote
cast represents over 50% of all shares entitled to vote
thereon) and approval of the WEC Article Amendments (as defined
in Section 7.20) by the votes required in the WEC Restated Ar-
ticles of Incorporation (collectively, the "WEC Shareholders'
Approval") are the only votes of the holders of any class or
series of the capital stock of WEC or any of its subsidiaries
required to approve this Agreement, the Mergers and the other
transactions contemplated hereby, provided that the approval of
shareholders of WEC may be required for the repurchase of
shares of WEC Common Stock pursuant to Section 7(a) of the WEC
Stock Option Agreement under circumstances where Section
180.1134(1) of the WBCL or Article III.D.(1) of WEC's Restated
Articles of Incorporation would be applicable.
Section 5.14 Accounting Matters. Neither WEC nor,
to WEC's best knowledge, any of its affiliates has taken or
agreed to take any action that would prevent the Company from
accounting for the transactions to be effected pursuant to this
Agreement as a pooling of interests in accordance with GAAP and
applicable SEC regulations.
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Section 5.15 Applicability of Certain Wisconsin Law.
Assuming that the representation and warranty of NSP made in
Section 4.18 is correct, none of the control share acquisition
provisions of Section 180.1150 of the WBCL, the business com-
bination provisions of Sections 180.1140 to 180.1144 of the
WBCL, the "fair price" provisions of Sections 180.1130 to
180.1134 of the WBCL or any similar provisions of the WBCL (or,
to the best knowledge of WEC, any other similar state statute)
or the Restated Articles of Incorporation or by-laws of WEC,
are applicable to the transactions contemplated by this Agree-
ment, including the granting or exercise of the WEC Stock Op-
tion Agreement (except as set forth in Section 5.15 of the WEC
Disclosure Schedule).
Section 5.16 Opinion of Financial Advisor. WEC has
received the opinion of Barr Devlin Associates, dated April 28,
1995, to the effect that, as of the date thereof, the Ratio is
fair from a financial point of view to the holders of WEC Com-
mon Stock.
Section 5.17 Insurance. Except as set forth in
Section 5.17 of the WEC Disclosure Schedule, WEC and each of
the WEC Subsidiaries is, and has been continuously since Janu-
ary 1, 1990, insured with financially responsible insurers in
such amounts and against such risks and losses as are customary
in all material respects for companies conducting the business
as conducted by WEC and the WEC Subsidiaries during such time
period. Except as set forth in Section 5.17 of the WEC Dis-
closure Schedule, neither WEC nor any of the WEC Subsidiaries
has received any notice of cancellation or termination with
respect to any material insurance policy of WEC or any of the
WEC Subsidiaries. The insurance policies of WEC and each of
the WEC Subsidiaries are valid and enforceable policies in all
material respects.
Section 5.18 Ownership of Old NSP Common Stock.
Except pursuant to the terms of the NSP Stock Option Agreement,
WEC does not "beneficially own" (as such term is defined for
purposes of Section 13(d) of the Exchange Act) any shares of
Old NSP Common Stock or Old NSP Preferred Stock.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 6.1 Covenants of the Parties. After the
date hereof and prior to the Effective Time or earlier termi-
nation of this Agreement, NSP and WEC each agree as follows,
each as to itself and to each of the NSP Subsidiaries and the
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WEC Subsidiaries, as the case may be, except as expressly con-
templated or permitted in this Agreement, the NSP Stock Option
Agreement or the WEC Stock Option Agreement, or to the extent
the other parties hereto shall otherwise consent in writing:
(a) Ordinary Course of Business. Each party hereto
shall, and shall cause its Direct Subsidiaries to, carry
on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as here-
tofore conducted and use all commercially reasonable ef-
forts to preserve intact their present business organi-
zations and goodwill, preserve the goodwill and relation-
ships with customers, suppliers and others having business
dealings with them and, subject to prudent management of
workforce needs and ongoing programs currently in force,
keep available the services of their present officers and
employees. Except as set forth in Section 6.1(a) of the
NSP Disclosure Schedule or the WEC Disclosure Schedule,
respectively, no party shall, nor shall any party permit
any of its Direct Subsidiaries to, enter into a new line
of business, or make any change in the line of business it
engages in as of the date hereof involving any material
investment of assets or resources or any material exposure
to liability or loss, in the case of NSP, to NSP and its
subsidiaries taken as a whole, and in the case of WEC, to
WEC and its subsidiaries taken as a whole.
(b) Dividends. No party shall, nor shall any party
permit any of its Direct Subsidiaries to, (i) declare or
pay any dividends on or make other distributions in re-
spect of any of their capital stock other than to such
party or its wholly-owned subsidiaries and other than
dividends required to be paid on any WEPCO Preferred Stock
or Old NSP Preferred Stock in accordance with the respec-
tive terms thereof, regular quarterly dividends on WEC
Common Stock with usual record and payment dates not,
during any fiscal year, in excess of 106% of the dividends
for the prior fiscal year and regular quarterly dividends
on Old NSP Common Stock with usual record and payment
dates not, during any fiscal year, in excess of 106% of
the dividends for the prior fiscal year; (ii) split, com-
bine or reclassify any of their capital stock or issue or
authorize or propose the issuance of any other securities
in respect of, in lieu of, or in substitution for, shares
of their capital stock; or (iii) redeem, repurchase or
otherwise acquire any shares of their capital stock, other
than (A) redemptions, purchases or acquisitions required
by the respective terms of any series of WEPCO Preferred
Stock or Old NSP Preferred Stock, (B) in connection with
refunding of WEPCO Preferred Stock or Old NSP Preferred
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Stock with preferred stock or debt at a lower cost of
funds (calculating such cost on an after-tax basis), (C)
in connection with intercompany purchases of capital stock
or (D) for the purpose of funding employee stock ownership
plans in accordance with past practice. The last record
date of each of WEC and NSP on or prior to the Effective
Time which relates to a regular quarterly dividend on WEC
Common Stock or Old NSP Common Stock, as the case may be,
shall be the same date and shall be prior to the Effective
Time. Notwithstanding the foregoing, (i) NSP may redeem
all or any portion of the Old NSP Preferred Stock if the
Board of Directors of NSP determines such course of action
will facilitate the transactions contemplated hereby and
(ii) WEPCO may redeem all or any portion of the WEPCO
Preferred Stock, if the WEPCO Board of Directors deter-
mines such course of action will facilitate the transac-
tions contemplated hereby.
(c) Issuance of Securities. No party shall, nor
shall any party permit any of its Direct Subsidiaries to,
issue, agree to issue, deliver, sell, award, pledge, dis-
pose of or otherwise encumber or authorize or propose the
issuance, delivery, sale, award, pledge, disposal or other
encumbrance of, any shares of their capital stock of any
class or any securities convertible into or exchangeable
for, or any rights, warrants or options to acquire, any
such shares or convertible or exchangeable securities,
other than pursuant to the NSP Stock Option Agreement and
the WEC Stock Option Agreement, as the case may be, other
than intercompany issuances of capital stock, and other
than issuances (i) in the case of WEC and the WEC Subsid-
iaries (x) in connection with refunding WEPCO Preferred
Stock with preferred stock or debt at a lower cost of
funds (calculating such cost on an after-tax basis); and
(y) up to 1,600,000 shares of WEC Common Stock to be is-
sued for general corporate purposes, including issuances
in connection with acquisitions and financing and issu-
ances pursuant to employee benefit plans, stock option and
other incentive compensation plans, directors plans and
stock purchase and dividend reinvestment plans; and (ii),
in the case of NSP and the NSP Subsidiaries (x) in con-
nection with refunding of Old NSP Preferred Stock with
preferred stock or debt at a lower cost of funds (calcu-
lating such cost on an after-tax basis); and (y) up to
2,900,000 shares of NSP Common Stock to be issued for
general corporate purposes, including issuances in con-
nection with acquisitions and financing and issuances
pursuant to employee benefit plans, stock option and other
incentive compensation plans, directors plans and stock
purchase and dividend reinvestment plans. The parties
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shall promptly furnish to each other such information as
may be reasonably requested including financial informa-
tion and take such action as may be reasonably necessary
and otherwise fully cooperate with each other in the
preparation of any registration statement under the Secu-
rities Act and other documents necessary in connection
with issuance of securities as contemplated by this Sec-
tion 6.1(c), subject to obtaining customary indemnities.
(d) Charter Documents. Except as set forth in Sec-
tion 6.1(d) of the NSP Disclosure Schedule or the WEC
Disclosure Schedule, no party shall amend or propose to
amend its respective articles of incorporation, by-laws or
regulations, or similar organic documents, except as con-
templated herein.
(e) No Acquisitions. Except as set forth in Section
6.1(e) of the NSP Disclosure Schedule or the WEC Disclo-
sure Schedule, other than acquisitions by a party and its
Direct Subsidiaries not in excess of $50 million over the
amount budgeted by such party for acquisition expendi-
tures, as set forth in such Section 6.1(e) of the NSP
Disclosure Schedule or the WEC Disclosure Schedule, sin-
gularly or in the aggregate, no party shall, nor shall any
party permit any of its Direct Subsidiaries to, acquire,
or publicly propose to acquire, or agree to acquire, by
merger or consolidation with, or by purchase or otherwise,
a substantial equity interest in or a substantial portion
of the assets of, any business or any corporation, part-
nership, association or other business organization or
division thereof, nor shall any party acquire or agree to
acquire a material amount of assets other than in the or-
dinary course of business consistent with past practice.
(f) Capital Expenditures and Emission Allowances.
Except as set forth in Section 6.1(f) of the NSP Disclo-
sure Schedule or the WEC Disclosure Schedule or as re-
quired by law, no party shall, nor shall any party permit
any of its Direct Subsidiaries to, (i) make capital ex-
penditures in excess of $100 million over the amount bud-
geted by such party for capital expenditures as set forth
in such Section 6.1(f) of the NSP Disclosure Schedule or
the WEC Disclosure Schedule or (ii) enter into written
commitments for the purchase of sulfur dioxide emission
allowances as provided for by the Clean Air Act Amendments
of 1990, in excess of $20 million, singularly or in the
aggregate.
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(g) No Dispositions. Except as set forth in Section
6.1(g) of the NSP Disclosure Schedule or the WEC Disclo-
sure Schedule, other than dispositions by a party and its
Direct Subsidiaries of less than $50 million, singularly
or in the aggregate, no party shall, nor shall any party
permit any of its Direct Subsidiaries to, sell, lease,
license, encumber or otherwise dispose of, any of its as-
sets, other than encumbrances or dispositions in the or-
dinary course of its business consistent with past prac-
tice.
(h) Indebtedness. Except as contemplated by this
Agreement, no party shall, nor shall any party permit any
of its Direct Subsidiaries to, incur or guarantee any in-
debtedness (including any debt borrowed or guaranteed or
otherwise assumed including, without limitation, the is-
suance of debt securities or warrants or rights to acquire
debt) or enter into any "keep well" or other agreement to
maintain any financial statement condition of another
person or enter into any arrangement having the economic
effect of any of the foregoing other than (i) short-term
indebtedness in the ordinary course of business consistent
with past practice (such as the issuance of commercial
paper or the use of existing credit facilities); (ii)
long-term indebtedness not aggregating more than $650
million; (iii) arrangements between such party and its
Direct Subsidiaries or among its Direct Subsidiaries; (iv)
as set forth in Section 6.1(h) of the NSP Disclosure
Schedule or the WEC Disclosure Schedule; (v) in connection
with the refunding of existing indebtedness at a lower
cost of funds; or (vi) in connection with the refunding of
WEPCO Preferred Stock or Old NSP Preferred Stock as per-
mitted in Section 6.1(b).
(i) Compensation, Benefits. Except as set forth in
Section 6.1(i) of the NSP Disclosure Schedule or the WEC
Disclosure Schedule, as may be required by applicable law
or as contemplated by this Agreement, no party shall, nor
shall any party permit any of its Direct Subsidiaries to,
(i) enter into, adopt or amend or increase the amount or
accelerate the payment or vesting of any benefit or amount
payable under, any employee benefit plan or other con-
tract, agreement, commitment, arrangement, plan or policy
maintained by, contributed to or entered into by such
party or any of its Direct Subsidiaries, or increase, or
enter into any contract, agreement, commitment or arrange-
ment to increase in any manner, the compensation or fringe
benefits, or otherwise to extend, expand or enhance the
engagement, employment or any related rights, of any di-
rector, officer or other employee of such party or any of
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its Direct Subsidiaries, except for normal increases in
the ordinary course of business consistent with past prac-
tice that, in the aggregate, do not result in a material
increase in benefits or compensation expense to such party
or any of its Direct Subsidiaries or (ii) enter into or
amend any employment, severance or special pay arrangement
with respect to the termination of employment or other
similar contract, agreement or arrangement with any di-
rector or officer or other employee other than in the or-
dinary course of business consistent with past practice.
(j) 1935 Act. Except as set forth in Section 6.1(j)
of the NSP Disclosure Schedule or WEC Disclosure Schedule,
no party shall, nor shall any party permit any of its Di-
rect Subsidiaries to, except as required or contemplated
by this Agreement, engage in any activities which would
cause a change in its status, or that of its subsidiaries,
under the 1935 Act, or that would impair the ability of
NSP to claim an exemption as of right under Rule 2 of the
1935 Act or that would impair the ability of WEC to claim
an exemption pursuant to its order under Section 3(a)(1)
of the 1935 Act prior to the Effective Time, other than
(i) the application to the SEC under the 1935 Act contem-
plated by this Agreement for approval to the extent re-
quired of the transactions contemplated hereby and (ii)
the registration of the Company pursuant to the 1935 Act.
(k) Transmission, Generation. Except as required
pursuant to tariffs on file with the FERC as of the date
hereof, in the ordinary course of business consistent with
past practice, or as set forth in Section 6.1(k) of the
NSP Disclosure Schedule or the WEC Disclosure Schedule, no
party shall, nor shall any party permit any of its Direct
Subsidiaries to, (i) commence construction of any addi-
tional generating, transmission or delivery capacity, or
(ii) obligate itself to purchase or otherwise acquire, or
to sell or otherwise dispose of, or to share, any addi-
tional generating, transmission or delivery capacity ex-
cept as set forth in the budgets of NSP and WEC.
(l) Accounting. Except as set forth in Section
6.1(l) of the NSP Disclosure Schedule or WEC Disclosure
Schedule, no party shall, nor shall any party permit any
of its Direct Subsidiaries to, make any changes in their
accounting methods, except as required by law, rule, reg-
ulation or GAAP.
(m) Pooling. No party shall, nor shall any party
permit any of its subsidiaries to, take any action which
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would, or would be reasonably likely to, prevent the Com-
pany from accounting for the transactions to be effected
pursuant to this Agreement as a pooling of interests in
accordance with GAAP and applicable SEC regulations, and
each party hereto shall use all reasonable efforts to
achieve such result (including taking such actions as may
be necessary to cure any facts or circumstances that could
prevent such transactions from qualifying for pooling-of-
interests accounting treatment).
(n) Tax-Free Status. No party shall, nor shall any
party permit any of its subsidiaries to, take any actions
which would, or would be reasonably likely to, adversely
affect the status of the Mergers as tax-free transactions
(except as to dissenters' rights and fractional shares)
under Section 368(a) of the Code, and each party hereto
shall use all reasonable efforts to achieve such result.
(o) Affiliate Transactions. Except as set forth in
Section 6.1(o) of each of the NSP Disclosure Schedule or
the WEC Disclosure Schedule, no party shall, nor shall any
party permit any of its Direct Subsidiaries to, enter into
any material agreement or arrangement with any of their
respective affiliates (other than wholly-owned subsidiar-
ies) on terms materially less favorable to such party than
could be reasonably expected to have been obtained with an
unaffiliated third party on an arm's-length basis.
(p) Cooperation, Notification. Each party shall,
and shall cause its Direct Subsidiaries to, (i) confer on
a regular and frequent basis with one or more representa-
tives of the other party to discuss, subject to applicable
law, material operational matters and the general status
of its ongoing operations; (ii) promptly notify the other
party of any significant changes in its business, proper-
ties, assets, condition (financial or other), results of
operations or prospects; (iii) advise the other party of
any change or event which has had or, insofar as reason-
ably can be foreseen, is reasonably likely to result in,
in the case of NSP, a NSP Material Adverse Effect or, in
the case of WEC, a WEC Material Adverse Effect; and (iv)
promptly provide the other party with copies of all fil-
ings made by such party or any of its Direct Subsidiaries
with any state or federal court, administrative agency,
commission or other Governmental Authority in connection
with this Agreement and the transactions contemplated
hereby.
(q) Rate Matters. Each of NSP and WEC shall, and
shall cause its Direct Subsidiaries to, discuss with the
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other any changes in its or its Direct Subsidiaries' rates
or charges (other than pass-through fuel and gas rates or
charges), standards of service or accounting from those in
effect on the date hereof and consult with the other prior
to making any filing (or any amendment thereto), or ef-
fecting any agreement, commitment, arrangement or consent
with governmental regulators, whether written or oral,
formal or informal, with respect thereto, and no party
will make any filing to change its rates on file with the
FERC that would have a material adverse effect on the
benefits associated with the business combination provided
for herein.
(r) Third-Party Consents. NSP shall, and shall
cause its Direct Subsidiaries to, use all commercially
reasonable efforts to obtain all NSP Required Consents.
NSP shall promptly notify WEC of any failure or prospec-
tive failure to obtain any such consents and, if requested
by WEC, shall provide copies of all NSP Required Consents
obtained by NSP to WEC. WEC shall, and shall cause its
Direct Subsidiaries to, use all commercially reasonable
efforts to obtain all WEC Required Consents. WEC shall
promptly notify NSP of any failure or prospective failure
to obtain any such consents and, if requested by NSP,
shall provide copies of all WEC Required Consents obtained
by WEC to NSP.
(s) No Breach, Etc. No party shall, nor shall any
party permit any of its Direct Subsidiaries to, willfully
take any action that would or is reasonably likely to re-
sult in a material breach of any provision of this Agree-
ment, the NSP Stock Option Agreement or the WEC Stock Op-
tion Agreement, as the case may be, or in any of its rep-
resentations and warranties set forth in this Agreement,
the NSP Stock Option Agreement, or the WEC Stock Option
Agreement, as the case may be, being untrue on and as of
the Closing Date.
(t) Tax-Exempt Status. No party shall, nor shall
any party permit any Direct Subsidiary to, take any action
that would likely jeopardize the qualification of NSP's or
WEPCO's outstanding revenue bonds which qualify on the
date hereof under Section 142(a) of the Code as "exempt
facility bonds" or as tax-exempt industrial development
bonds under Section 103(b)(4) of the Internal Revenue Code
of 1954, as amended, prior to the Tax Reform Act of 1986.
(u) Transition Management. As soon as practicable
after the date hereof, the parties shall create a special
transition management task force (the "Task Force") which
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shall be headed by James J. Howard ("Mr. Howard") and Ri-
chard A. Abdoo ("Mr. Abdoo"). The Task Force shall exam-
ine various alternatives regarding the manner in which to
best organize and manage the business of the Company after
the Effective Time, subject to applicable law. Messrs.
Howard and Abdoo will have joint decision-making authority
regarding the Task Force, and Mr. Abdoo will manage and be
responsible for the day-to-day activities and operations
of the Task Force.
(v) Company Actions. WEC and NSP shall cause the
Company to take only those actions, from the date hereof
until the Effective Time, that are required or contem-
plated by this Agreement to be so taken by the Company,
including, without limitation, the declaration, filing or
registration with, or notice to or authorization, consent
or approval of, any Governmental Authority, as set forth
in Section 4.4(b) of the NSP Disclosure Schedule, Section
4.4(c) of the NSP Disclosure Schedule, Section 5.4(b) of
the WEC Disclosure Schedule and Section 5.4(c) of the WEC
Disclosure Schedule.
(w) Tax Matters. Except as set forth in Section
6.1(w) of the NSP Disclosure Schedule or the WEC Disclo-
sure Schedule, no party shall make or rescind any material
express or deemed election relating to taxes, settle or
compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or contro-
versy relating to taxes, or change any of its methods of
reporting income or deductions for federal income tax
purposes from those employed in the preparation of its
federal income tax return for the taxable year ending De-
cember 31, 1993, except as may be required by applicable
law.
(x) Discharge of Liabilities. No party shall pay,
discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, dis-
charge or satisfaction, in the ordinary course of business
consistent with past practice (which includes the payment
of final and unappealable judgments) or in accordance with
their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated fi-
nancial statements (or the notes thereto) of such party
included in such party's reports filed with the SEC, or
incurred in the ordinary course of business consistent
with past practice.
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(y) Contracts. No party shall, except in the ordi-
nary course of business consistent with past practice,
modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agree-
ment to which such party or any Direct Subsidiary of such
party is a party or waive, release or assign any material
rights or claims.
(z) Insurance. Each party shall, and shall cause
its Direct Subsidiaries to, maintain with financially re-
sponsible insurance companies insurance in such amounts
and against such risks and losses as are customary for
companies engaged in the electric and gas utility industry
and employing methods of generating electric power and
fuel sources similar to those methods employed and fuels
used by such party or its Direct Subsidiaries.
(aa) Permits. Each party shall, and shall cause its
Direct Subsidiaries to, use reasonable efforts to maintain
in effect all existing governmental permits pursuant to
which such party or its Direct Subsidiaries operate.
(bb) Limitation on Investments in Unrestricted Sub-
sidiaries. From and after the date hereof, NSP will not
make, and will not permit any NSP Subsidiary to make, any
additional investments in, or loans or capital contribu-
tions to, or to undertake any guarantees or other obliga-
tions with respect to, any NSP Unrestricted Subsidiary in
excess of $350 million (which number shall be made up of,
and shall not be in duplication of, the amounts budgeted
for capital expenditures and acquisitions as set forth in
Sections 6.1(e) and (f) of the NSP Disclosure Schedule and
amounts spent pursuant to the $50 million basket refer-
enced in Section 6.1(e)) in the aggregate to all NSP Un-
restricted Subsidiaries; and WEC will not make, and will
not permit any WEC Subsidiary to make, any additional in-
vestments in, or loans or capital contributions to, or to
undertake any guarantees or other obligations with respect
to, any WEC Unrestricted Subsidiary in excess of $100
million (which number shall be made up of, and shall not
be in duplication of, the amounts budgeted for capital
expenditures and acquisitions as set forth in Sections
6.1(e) and (f) of the WEC Disclosure Schedule and amounts
spent pursuant to the $50 million basket referenced in
Section 6.1(e)) in the aggregate to all WEC Unrestricted
Subsidiaries.
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable
notice, each party shall, and shall cause its Direct Subsid-
iaries to, afford to the officers, directors, employees, ac-
countants, counsel, investment bankers, financial advisors and
other representatives of the other (collectively, "Representa-
tives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to all of
its properties, books, contracts, commitments and records (in-
cluding, but not limited to, Tax Returns) and, during such pe-
riod, each party shall, and shall cause its Direct Subsidiaries
to, furnish promptly to the other (i) access to each report,
schedule and other document filed or received by it or any of
its Direct Subsidiaries pursuant to the requirements of federal
or state securities laws or filed with or sent to the SEC, the
FERC, the NRC, the Department of Justice, the Federal Trade
Commission, the Minnesota Public Utilities Commission, the
Public Service Commission of Wisconsin or any other federal or
state regulatory agency or commission, and (ii) access to all
information concerning themselves, their subsidiaries, direc-
tors, officers and shareholders and such other matters as may
be reasonably requested by the other party in connection with
any filings, applications or approvals required or contemplated
by this Agreement or for any other reason related to the
transactions contemplated by this Agreement. Each party shall
provide access to those premises, documents, reports and in-
formation described above of subsidiaries of such party that
are not Direct Subsidiaries to the extent such party has or is
able to obtain such access. Each party shall, and shall cause
its subsidiaries and Representatives to, hold in strict confi-
dence all documents and information concerning the other fur-
nished to it in connection with the transactions contemplated
by this Agreement in accordance with the Confidentiality
Agreement, dated January 17, 1995, between NSP and WEC, as it
may be amended from time to time (the "Confidentiality Agree-
ment").
Section 7.2 Joint Proxy Statement and Registration
Statement.
(a) Preparation and Filing. The parties will pre-
pare and file with the SEC as soon as reasonably practicable
after the date hereof the Registration Statement and the Proxy
Statement (together, the "Joint Proxy/Registration Statement").
The parties hereto shall each use reasonable efforts to cause
the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such filing.
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Each party hereto shall also take such action as may be rea-
sonably required to cause the shares of Company Common Stock
issuable in connection with the Mergers to be registered or to
obtain an exemption from registration under applicable state
"blue sky" or securities laws; provided, however, that no party
shall be required to register or qualify as a foreign corpora-
tion or to take other action which would subject it to service
of process in any jurisdiction where it will not be, following
the Mergers, so subject. Each of the parties hereto shall
furnish all information concerning itself which is required or
customary for inclusion in the Joint Proxy/Registration State-
ment. The parties shall use reasonable efforts to cause the
shares of Company Common Stock issuable in the Mergers to be
approved for listing on the NYSE upon official notice of issu-
ance. The information provided by any party hereto for use in
the Joint Proxy/Registration Statement shall be true and cor-
rect in all material respects without omission of any material
fact which is required to make such information not false or
misleading. No representation, covenant or agreement is made
by any party hereto with respect to information supplied by any
other party for inclusion in the Joint Proxy Statement/Regis-
tration Statement.
(b) Letter of NSP's Accountants. NSP shall use best
efforts to cause to be delivered to WEC letters of Deloitte &
Touche LLP and Price Waterhouse LLP, dated a date within two
business days before the date of the Joint Proxy/Registration
Statement, and addressed to WEC, in form and substance reason-
ably satisfactory to WEC and customary in scope and substance
for "cold comfort" letters delivered by independent public ac-
countants in connection with registration statements on Form
S-4.
(c) Letter of WEC's Accountants. WEC shall use best
efforts to cause to be delivered to NSP a letter of Price Wa-
terhouse LLP, dated a date within two business days before the
date of the Joint Proxy/Registration Statement, and addressed
to NSP, in form and substance reasonably satisfactory to NSP
and customary in scope and substance for "cold comfort" letters
delivered by independent public accountants in connection with
registration statements on Form S-4.
(d) Fairness Opinions. It shall be a condition to
the mailing of the Joint Proxy/Registration Statement to the
shareholders of NSP and WEC that (i) NSP shall have received an
opinion from Goldman, Sachs & Co., dated the date of the Joint
Proxy/Registration Statement, to the effect that, as of the
date thereof, the Ratio is fair to the holders of Old NSP Com-
mon Stock and (ii) WEC shall have received an opinion from Barr
Devlin Associates, dated the date of the Joint Proxy Statement,
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to the effect that, as of the date thereof, the Ratio is fair
from a financial point of view to the holders of WEC Common
Stock.
Section 7.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or
cause to be filed with the Federal Trade Commission and the
Department of Justice any notifications required to be filed by
their respective "ultimate parent" companies under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules and regulations promulgated
thereunder with respect to the transactions contemplated here-
by. Such parties will use all commercially reasonable efforts
to make such filings promptly and to respond promptly to any
requests for additional information made by either of such
agencies.
(b) Other Regulatory Approvals. Each party hereto
shall cooperate and use its best efforts to promptly prepare
and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents,
and to use all commercially reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of
all Governmental Authorities necessary or advisable to consum-
mate the transactions contemplated by this Agreement, includ-
ing, without limitation, the NSP Required Statutory Approvals
and the WEC Required Statutory Approvals.
Section 7.4 Shareholder Approval.
(a) Approval of WEC Shareholders. Subject to the
provisions of Section 7.4(c) and Section 7.4(d), WEC shall, as
soon as reasonably practicable after the date hereof (i) take
all steps necessary to duly call, give notice of, convene and
hold a special meeting of its shareholders (the "WEC Special
Meeting") for the purpose of securing the WEC Shareholders'
Approval, (ii) distribute to its shareholders the joint Proxy
Statement in accordance with applicable federal and state law
and with its Restated Articles of Incorporation and by-laws,
(iii) subject to the fiduciary duties of its Board of Direc-
tors, recommend to its shareholders the approval of the NSP
Merger, this Agreement and the transactions contemplated hereby
(including the WEC Article Amendments) and (iv) cooperate and
consult with NSP with respect to each of the foregoing matters.
(b) Approval of NSP Shareholders. Subject to the
provisions of Section 7.4(c) and Section 7.4(d), NSP shall, as
soon as reasonably practicable after the date hereof (i) take
all steps necessary to duly call, give notice of, convene and
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hold a special meeting of its shareholders (the "NSP Special
Meeting") for the purpose of securing the NSP Shareholders'
Approval, (ii) distribute to its shareholders the joint Proxy
Statement in accordance with applicable federal and state law
and with its Restated Articles of Incorporation and by-laws,
(iii) subject to the fiduciary duties of its Board of Direc-
tors, recommend to its shareholders the approval of the NSP
Merger, this Agreement and the transactions contemplated hereby
and (iv) cooperate and consult with WEC with respect to each of
the foregoing matters.
(c) Meeting Date. The WEC Special Meeting for the
purpose of securing the WEC Shareholders' Approval and the NSP
Special Meeting for the purpose of securing the NSP Sharehold-
ers' Approval shall be held on such dates as NSP and WEC shall
mutually determine.
(d) Fairness Opinions Not Withdrawn. It shall be a
condition to the obligation of NSP to hold the NSP Special
Meeting that the opinion of Goldman, Sachs & Co., referred to
in Section 7.2(d), shall not have been withdrawn, and it shall
be a condition to the obligation of WEC to hold the WEC Special
Meeting that the opinion of Barr Devlin Associates, referred to
in Section 7.2(d), shall not have been withdrawn.
Section 7.5 Directors' and Officers' Indemnifica-
tion.
(a) Indemnification. To the extent, if any, not
provided by an existing right of indemnification or other
agreement or policy, from and after the Effective Time, the
Company shall, to the fullest extent permitted by applicable
law, indemnify, defend and hold harmless each person who is
now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer, director or
employee of any of the parties hereto or any subsidiary (each
an "Indemnified Party" and collectively, the "Indemnified Par-
ties") against (i) all losses, expenses (including reasonable
attorney's fees and expenses), claims, damages or liabilities
or, subject to the proviso of the next succeeding sentence,
amounts paid in settlement, arising out of actions or omissions
occurring at or prior to the Effective Time (and whether as-
serted or claimed prior to, at or after the Effective Time)
that are, in whole or in part, based on or arising out of the
fact that such person is or was a director, officer or employee
of such party (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or
arise out of or pertain to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim,
-49-
damage or liability (whether or not arising before the Effec-
tive Time), (i) the Company shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to the Company,
promptly after statements therefor are received and otherwise
advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, in either case to the
extent not prohibited by the WBCL and upon receipt of any af-
firmation and undertaking required by Section 180.0853 of the
WBCL, (ii) the Company will cooperate in the defense of any
such matter and (iii) any determination required to be made
with respect to whether an Indemnified Party's conduct complies
with the standards set forth under Wisconsin law and the Re-
stated Articles of Incorporation (including the WEC Article
Amendments) or By-laws of the Company (as the same shall be
amended pursuant to Section 7.20) shall be made by independent
counsel mutually acceptable to the Company and the Indemnified
Party; provided, however, that the Company shall not be liable
for any settlement effected without its written consent (which
consent shall not be unreasonably withheld). The Indemnified
Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the
opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any signifi-
cant issue between positions of such Indemnified Party and any
other Indemnified Party or Indemnified Parties.
(b) Insurance. For a period of six years after the
Effective Time, the Company shall cause to be maintained in
effect policies of directors' and officers' liability insurance
maintained by NSP and WEC for the benefit of those persons who
are currently covered by such policies on terms no less favor-
able than the terms of such current insurance coverage; pro-
vided, however, that the Company shall not be required to ex-
pend in any year an amount in excess of 200% of the annual ag-
gregate premiums currently paid by NSP and WEC for such in-
surance; and provided, further, that if the annual premiums of
such insurance coverage exceed such amount, the Company shall
be obligated to obtain a policy with the best coverage avail-
able, in the reasonable judgment of the Board of Directors of
the Company, for a cost not exceeding such amount.
(c) Successors. In the event the Company or any of
its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provisions
shall be made so that the successors and assigns of the Company
shall assume the obligations set forth in this Section 7.5.
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(d) Survival of Indemnification. To the fullest
extent permitted by law, from and after the Effective Time, all
rights to indemnification as of the date hereof in favor of the
employees, agents, directors and officers of NSP, WEC and their
respective subsidiaries with respect to their activities as
such prior to the Effective Time, as provided in their respec-
tive articles of incorporation and by-laws in effect on the
date thereof, or otherwise in effect on the date hereof, shall
survive the Mergers and shall continue in full force and effect
for a period of not less than six years from the Effective
Time.
(e) Benefit. The provisions of this Section 7.5 are
intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party, his or her heirs and his or her repre-
sentatives.
Section 7.6 Disclosure Schedules. On the date
hereof, (i) WEC has delivered to NSP a schedule (the "WEC Dis-
closure Schedule"), accompanied by a certificate signed by the
chief financial officer of WEC stating the WEC Disclosure
Schedule is being delivered pursuant to this Section 7.6(i) and
(ii) NSP has delivered to WEC a schedule (the "NSP Disclosure
Schedule"), accompanied by a certificate signed by the chief
financial officer of NSP stating the NSP Disclosure Schedule is
being delivered pursuant to this Section 7.6(ii). The NSP
Disclosure Schedule and the WEC Disclosure Schedule are col-
lectively referred to herein as the "Disclosure Schedules".
The Disclosure Schedules constitute an integral part of this
Agreement and modify the respective representations, warran-
ties, covenants or agreements of the parties hereto contained
herein to the extent that such representations, warranties,
covenants or agreements expressly refer to the Disclosure
Schedules. Anything to the contrary contained herein or in the
Disclosure Schedules notwithstanding, any and all statements,
representations, warranties or disclosures set forth in the
Disclosure Schedules shall be deemed to have been made on and
as of the date hereof.
Section 7.7 Public Announcements. Subject to each
party's disclosure obligations imposed by law, NSP and WEC will
cooperate with each other in the development and distribution
of all news releases and other public information disclosures
with respect to this Agreement or any of the transactions con-
templated hereby and shall not issue any public announcement or
statement with respect hereto or thereto without the consent of
the other party (which consent shall not be unreasonably with-
held).
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Section 7.8 Rule 145 Affiliates. Within 30 days
after the date of this Agreement, NSP shall identify in a let-
ter to WEC, and WEC shall identify in a letter to NSP, all
persons who are, and to such person's best knowledge who will
be at the Closing Date, "affiliates" of NSP and WEC, respec-
tively, as such term is used in Rule 145 under the Securities
Act (or otherwise under applicable SEC accounting releases with
respect to pooling-of-interests accounting treatment). Each of
NSP and WEC shall use all reasonable efforts to cause their
respective affiliates (including any person who may be deemed
to have become an affiliate after the date of the letter re-
ferred to in the prior sentence) to deliver to the Company on
or prior to the Closing Date a written agreement substantially
in the form attached as Exhibit 7.8 (each, an "Affiliate
Agreement").
Section 7.9 Employee Agreements and Workforce Mat-
ters.
(a) Certain Employee Agreements. Subject to Section
7.10, Section 7.14 and Section 7.15, the Company and its sub-
sidiaries shall honor, without modification, all contracts,
agreements, collective bargaining agreements and commitments of
the parties prior to the date hereof which apply to any current
or former employee or current or former director of the parties
hereto; provided, however, that this undertaking is not in-
tended to prevent the Company from enforcing such contracts,
agreements, collective bargaining agreements and commitments in
accordance with their terms, including, without limitation, any
reserved right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement
or commitment.
(b) Workforce Matters. Subject to applicable col-
lective bargaining agreements, for a period of three years
following the Effective Time, any reductions in workforce in
respect of employees of the Company shall be made on a fair and
equitable basis, in light of the circumstances and the objec-
tives to be achieved, giving consideration to previous work
history, job experience, and qualifications, without regard to
whether employment was with NSP or its subsidiaries or WEC or
its subsidiaries, and any employees whose employment is termi-
nated or jobs are eliminated by the Company or any of its sub-
sidiaries during such period shall be entitled to participate
on a fair and equitable basis in the job opportunity and em-
ployment placement programs offered by the Company or any of
its subsidiaries. Any workforce reductions carried out fol-
lowing the Effective Time by the Company and its subsidiaries
shall be done in accordance with all applicable collective
bargaining agreements, and all laws and regulations governing
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the employment relationship and termination thereof including,
without limitation, the Worker Adjustment and Retraining Noti-
fication Act and regulations promulgated thereunder, and any
comparable state or local law.
Section 7.10 Employee Benefit Plans.
(a) Maintenance of NSP and WEC Benefit Plans. Sub-
ject to Section 7.10(b), Section 7.10(c) and Section 6.1(i),
each of the NSP Benefit Plans and WEC Benefit Plans in effect
at the date hereof shall be maintained in effect with respect
to the employees or former employees of NSP and any of its Di-
rect Subsidiaries, on the one hand, and of WEC and any of its
Direct Subsidiaries, on the other hand, respectively, who are
covered by any such benefit plan immediately prior to the
Closing Date (the "Affiliated Employees") until the Company
otherwise determines after the Effective Time; provided, how-
ever, that nothing herein contained shall limit any reserved
right contained in any such NSP Benefit Plan or WEC Benefit
Plan to amend, modify, suspend, revoke or terminate any such
plan; provided, further, however, that the Company or its sub-
sidiaries shall provide to the Affiliated Employees for a pe-
riod of not less than one year following the Effective Time
benefits, other than with respect to plans referred to in Sec-
tion 7.10(b) and Section 7.11, which are no less favorable in
the aggregate than those provided under the NSP Benefit Plans
or the WEC Benefit Plans, as the case may be. Without limita-
tion of the foregoing, each participant of any such NSP Benefit
Plan or WEC Benefit Plan shall receive credit for purposes of
eligibility to participate, vesting, benefit accrual and eli-
gibility to receive benefits under any benefit plan of the
Company or any of its subsidiaries or affiliates for service
credited for the corresponding purpose under such benefit plan;
provided, however, that such crediting of service shall not
operate to duplicate any benefit to any such participant or the
funding for any such benefit. Any person hired by the Company
or any of its subsidiaries after the Closing Date who was not
employed by any party hereto or its subsidiaries immediately
prior to the Closing Date shall be eligible to participate in
such benefit plans maintained, or contributed to, by the sub-
sidiary, division or operation by which such person is em-
ployed, provided that such person meets the eligibility re-
quirements of the applicable plan.
(b) Adoption of Company Replacement Plans. With
respect to the WEC Short-Term Performance Plan (the "WEC In-
centive Plan"), the NSP Executive Incentive Compensation Plan
(the "NSP Incentive Plan"), the NSP Long-Term Incentive Award
Stock Plan (the "NSP Stock Plan") and the WEC 1993 Omnibus
Stock Incentive Plan (the "WEC Stock Plan"), the Company and
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its subsidiaries shall adopt replacement plans as set forth in
this Section 7.10(b) (collectively, the "Company Replacement
Plans"). Each Company Replacement Plan shall amend and super-
sede the corresponding NSP or WEC plan and such corresponding
plan shall, as of the Effective Time, be merged with and into
the appropriate Company Replacement Plan. The WEC Incentive
Plan and the NSP Incentive Plan shall be replaced by a new an-
nual bonus plan under which cash bonuses, based on percentages
of base salaries, are awarded based upon the achievement of
performance goals determined in advance by the Compensation
Committee of the Board of Directors of the Company (the "Com-
mittee"). With respect to those participants in the new plan
who are, or who the Committee determines are likely to be,
"covered individuals" within the meaning of Section 162(m) of
the Code, the performance goals shall be objective standards
that are approved by shareholders in accordance with the re-
quirements for exclusion from the limits of Section 162(m) of
the Code as performance-based compensation. The NSP Stock Plan
and the WEC Stock Plan shall be replaced by a stock compensa-
tion plan (the "Company Stock Plan") providing for the grant of
stock options, stock appreciation rights, restricted stock and
such other awards based upon the Company Common Stock as the
Board of Directors may determine, subject to shareholder ap-
proval of the Company Stock Plan. The Company shall reserve 12
million shares for issuance under the Company Stock Plan.
(c) NSP and WEC Action. With respect to each of the
Company Replacement Plans, each of NSP and WEC shall take all
corporate action necessary or appropriate to obtain the ap-
proval of the respective shareholders with respect to such plan
prior to the Effective Time. Before the Effective Time, WEC
shall take all steps necessary to amend (i) the WEC Supplemen-
tal Executive Retirement Plan, (ii) the WEC Executive Non-
Qualified Trust, (iii) each of the Supplemental Retirement
Benefit Agreements set forth in Section 5.10(g) of the WEC
Disclosure Schedule, (iv) the WEC Executive Deferred Compensa-
tion Plan, (v) the WEC Directors' Deferred Compensation Plan,
and (vi) the WEPCO Directors' Deferred Compensation Plan, so
that none of the transactions contemplated by this Agreement
shall constitute a Change of Control for purposes of said ar-
rangements, provided that with respect to items (iii) through
(vi), WEC shall use its best efforts to obtain the consent of
the other parties thereto. Prior to or as soon as practicable
after the date hereof, each of NSP and WEC shall adopt sever-
ance plans substantially in the forms attached hereto as Ex-
hibits 7.10(a) and 7.10(b), respectively.
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Section 7.11 Stock Option and Other Stock Plans.
(a) Amendment of NSP Stock Plan and Agreements. Ef-
fective as of the Effective Time, NSP shall amend the NSP Stock
Plan and each underlying award agreement to provide that (i)
each outstanding option to purchase shares of Old NSP Common
Stock (each, a "NSP Stock Option"), along with any tandem stock
appreciation right, shall constitute an option to acquire
shares of Company Common Stock, on the same terms and condi-
tions as were applicable under such NSP Stock Option, based on
the same number of shares of the Company Common Stock as the
holder of such NSP Stock Option would have been entitled to
receive pursuant to the NSP Merger in accordance with Article
II had such holder exercised such option in full immediately
prior to the Effective Time; provided, that the number of
shares, the option price, and the terms and conditions of ex-
ercise of such option, shall be determined in a manner that
preserves both (A) the aggregate gain (or loss) on the NSP
Stock Option immediately prior to the Effective Time and (B)
the ratio of the exercise price per share subject to the NSP
Stock Option to the fair market value (determined immediately
prior to the Effective Time) per share subject to such option;
and provided, further, that in the case of any option to which
Section 421 of the Code applies by reason of its qualification
under any of Sections 422-424 of the Code, the option price,
the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424(a) of the Code;
and (ii) each other outstanding award under the NSP Stock Plan
("NSP Stock Awards") shall constitute an award based upon the
same number of shares of Company Common Stock as the holder of
such NSP Stock Award would have been entitled to receive pur-
suant to the NSP Merger in accordance with Article II had such
holder been the absolute owner, immediately before the Effec-
tive Time, of the shares of NSP Common Stock on which such NSP
Stock Award is based, and otherwise on the same terms and con-
ditions as governed such NSP Stock Award immediately before the
Effective Time. At the Effective Time, the Company shall as-
sume each stock award agreement relating to the NSP Stock Plan,
each as amended as previously provided. As soon as practicable
after the Effective Time, the Company shall deliver to the
holders of NSP Stock Options and NSP Stock Awards appropriate
notices setting forth such holders' rights pursuant to the
Company Stock Plan and each underlying stock award agreement,
each as assumed by the Company.
(b) Amendment of WEC Stock Plan and Agreements.
Effective as of the Effective Time, WEC shall amend the WEC
Stock Plan and use its best efforts to amend each underlying
stock award agreement to provide that none of the transactions
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contemplated by this Agreement shall constitute a Change in
Control for purposes of the WEC Stock Plan.
(c) Company Action. With respect to each of the NSP
Stock Plan, the WEC Stock Plan, the NSP Employee Stock Owner-
ship Plan and any other plans under which the delivery of Old
NSP Common Stock, WEC Common Stock or Company Common Stock is
required upon payment of benefits, grant of awards or exercise
of options (the "Stock Plans"), the Company shall take all
corporate action necessary or appropriate to (i) obtain share-
holder approval with respect to such Stock Plan to the extent
such approval is required for purposes of the Code or other
applicable law, or to enable such Stock Plan to comply with
Rule 16b-3 promulgated under the Exchange Act, (ii) reserve for
issuance under such plan or otherwise provide a sufficient
number of shares of Company Common Stock for delivery upon
payment of benefits, grant of awards or exercise of options
under such Stock Plan and (iii) as soon as practicable after
the Effective Time, file registration statements on Form S-3 or
Form S-8, as the case may be (or any successor or other appro-
priate forms), with respect to the shares of Company Common
Stock subject to such Stock Plan to the extent such registra-
tion statement is required under applicable law, and the Com-
pany shall use its best efforts to maintain the effectiveness
of such registration statements (and maintain the current sta-
tus of the prospectuses contained therein) for so long as such
benefits and grants remain payable and such options remain
outstanding. With respect to those individuals who subsequent
to the Mergers will be subject to the reporting requirements
under Section 16(a) of the Exchange Act, the Company shall ad-
minister the Stock Plans, where applicable, in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act.
Section 7.12 No Solicitations. No party hereto
shall, and each such party shall cause its Direct Subsidiaries
not to, shall not permit any of its Representatives or subsid-
iaries that are not Direct Subsidiaries to, and shall use its
best efforts to cause such persons not to, directly or indi-
rectly: initiate, solicit or encourage, or take any action to
facilitate the making of any offer or proposal which consti-
tutes or is reasonably likely to lead to, any Business Combi-
nation Proposal (as defined below), or, in the event of an un-
solicited Business Combination Proposal, except to the extent
required by their fiduciary duties under applicable law if so
advised in a written opinion of outside counsel, engage in ne-
gotiations or provide any information or data to any person
relating to any Business Combination Proposal. Each party
hereto shall notify the other party orally and in writing of
any such inquiries, offers or proposals (including, without
limitation, the terms and conditions of any such proposal and
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the identity of the person making it), within 24 hours of the
receipt thereof, shall keep the other party informed of the
status and details of any such inquiry, offer or proposal, and
shall give the other party five days' advance notice of any
agreement to be entered into with or any information to be
supplied to any person making such inquiry, offer or proposal.
Each party hereto shall immediately cease and cause to be ter-
minated all existing discussions and negotiations, if any, with
any parties conducted heretofore with respect to any Business
Combination Proposal. As used in this Section 7.12, "Business
Combination Proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combi-
nation involving any party to this Agreement or any of its ma-
terial subsidiaries, or any proposal or offer (in each case,
whether or not in writing and whether or not delivered to the
stockholders of a party generally) to acquire in any manner,
directly or indirectly, a substantial equity interest in or a
substantial portion of the assets of any party to this Agree-
ment or any of its material subsidiaries, other than pursuant
to the transactions contemplated by this Agreement or referred
to in Section 7.19(c) of this Agreement. Nothing contained
herein shall prohibit a party from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act with respect to a Business Combination Proposal by
means of a tender offer.
Section 7.13 Company Board of Directors. NSP's and
WEC's respective Boards of Directors will take such action as
may be necessary to cause the number of directors comprising
the full Board of Directors of the Company at the Effective
Time to be 12 persons, six of whom shall be designated by NSP
prior to the Effective Time and six of whom shall be designated
by WEC prior to the Effective Time. The initial designation of
such directors among the three classes of the Board of Direc-
tors of the Company shall be agreed to by NSP and WEC, the
designees of each party to be divided equally among such
classes; provided, however, that if, prior to the Effective
Time, any of such designees shall decline or be unable to
serve, the party which designated such person shall designate
another person to serve in such person's stead. NSP's and
WEC's respective Boards of Directors will also take such action
as may be necessary to cause the committees of the Board of
Directors of the Company at the Effective Time to consist of
that number of NSP and WEC designees with such chairs as are
set forth on Exhibit 7.13.
Section 7.14 Company Officers. At the Effective
Time, pursuant to the terms hereof and of the employment con-
tracts referred to in Section 7.15: (a) Mr. Howard shall hold
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the positions of Chairman of the Board and Chief Executive Of-
ficer of the Company and shall be entitled to serve in such
capacities until the end of the Initial Period (as defined in
Mr. Howard's employment contract entered into pursuant to Sec-
tion 7.15), at which time he shall be entitled to continue to
hold the position of Chairman of the Board of the Company until
the end of the Secondary Period (as defined in Mr. Howard's
employment contract entered into pursuant to Section 7.15); and
(b) Mr. Abdoo shall hold the positions of Vice Chairman of the
Board, President and Chief Operating Officer of the Company and
shall be entitled to serve in such capacities until the end of
the Initial Period, at which time he shall be entitled to hold
the additional position of Chief Executive Officer of the Com-
pany and to serve in all such capacities until his successor is
elected or appointed and shall have qualified in accordance
with the WBCL and the Restated Articles of Incorporation (in-
cluding the WEC Article Amendments) and By-laws of the Company
(as the same shall be amended pursuant to Section 7.20). If
either of such persons is unable or unwilling to hold such of-
fices for the periods set forth above, his successor shall be
selected by the Board of Directors of the Company in accordance
with its By-laws.
Section 7.15 Employment Contracts. The Company
shall, as of or prior to the Effective Time, enter into em-
ployment contracts with Mr. Howard and Mr. Abdoo in the forms
set forth in Exhibit 7.15.1 and Exhibit 7.15.2, respectively.
Section 7.16 Post-Merger Operations. Following the
Effective Time, the Company shall conduct its operations in
accordance with the following:
(a) Principal Corporate Offices. The Company and
NSP shall maintain their principal corporate offices in
Minnesota in the city of Minneapolis and WEPCO shall
maintain its principal corporate offices in Wisconsin in
the city of Milwaukee.
(b) Maintenance of Separate Existence of New NSP and
WEPCO. WEPCO, on the one hand, and New NSP, on the other
hand, shall continue their separate corporate existences,
operating under the names of "WISCONSIN ENERGY COMPANY"
and "NORTHERN STATES POWER COMPANY", respectively. The
respective corporate officers of WEPCO, on the one hand,
and NSP, on the other hand, shall be entitled to maintain
their current titles and responsibilities as officers of
WEPCO and New NSP, respectively, unless and until other-
wise determined by the Board of Directors of WEPCO and New
NSP.
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(c) Charities. After the Effective Time, the Com-
pany shall provide charitable contributions and community
support within the service areas of the parties and each
of their respective subsidiaries at levels substantially
comparable to the levels of charitable contributions and
community support provided by the parties and their re-
spective subsidiaries within their service areas within
the two-year period immediately prior to the Effective
Time. The assets of The Wisconsin Energy Corporation
Foundation, Inc. (the "Foundation") shall be used for
charitable purposes in accordance with the articles and
by-laws of the Foundation in the service areas of WEPCO
(including the prior service area of NSP-W) unless changed
by the Board of Directors of the Company.
Section 7.17 Expenses. Subject to Section 9.3, all
costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
party incurring such expenses, except that those expenses in-
curred in connection with printing the Joint Proxy/Registration
Statement, as well as the filing fee relating thereto, shall be
shared equally by NSP and WEC.
Section 7.18 Further Assurances. Each party will,
and will cause its Direct Subsidiaries to, execute such further
documents and instruments and take such further actions as may
reasonably be requested by any other party in order to consum-
mate the Mergers in accordance with the terms hereof. The
parties expressly acknowledge and agree that, although it is
their current intention to effect a business combination among
themselves in the form contemplated by this Agreement, it may
be preferable to effectuate such a business combination by
means of an alternative structure in light of the conditions
set forth in Section 8.1(e), Section 8.2(e), Section 8.2(f),
Section 8.3(e), and Section 8.3(f). Accordingly, if the only
conditions to the parties' obligations to consummate the Merg-
ers which are not satisfied or waived are receipt of any one or
more of the NSP Required Consents, NSP Required Statutory Ap-
provals, WEC Required Consents, WEC Required Statutory Approv-
als or the ruling referred to in Sections 8.2(e) and 8.3(e),
and the adoption of an alternative structure (that otherwise
substantially preserves for NSP and WEC the economic benefits
of the Merger) would result in such conditions being satisfied
or waived, then the parties shall use their respective best
efforts to effect a business combination among themselves by
means of a mutually agreed upon structure other than the Merg-
ers that so preserves such benefits; provided that, prior to
closing any such restructured transaction, all material third
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party and Governmental Authority declarations, filings, regis-
trations, notices, authorizations, consents or approvals nec-
essary for the effectuation of such alternative business com-
bination shall have been obtained and all other conditions to
the parties' obligations to consummate the Mergers, as applied
to such alternative business combination, shall have been sat-
isfied or waived.
Section 7.19 Utility Asset Transfer. In addition to
the transactions described in Article I and Article II, con-
temporaneously with the Reincorporation Effective Time, NSP-W
shall sell and transfer to New NSP certain utility assets lo-
cated in the State of Wisconsin such that, upon such transfer,
New NSP shall be a Wisconsin utility for purposes of consider-
ing its assets as assets of a public utility affiliate in the
determination made under Section 196.795(5)(p) of the Wisconsin
Statutes.
Section 7.20 Charter and By-Law Amendments. Prior
to the Closing: (a) WEC and NSP shall agree upon amendments to
be effected to the Restated Articles of Incorporation of WEC,
including to change the name of WEC to a name agreed upon by
NSP and WEC (which shall not be the name of, or a name sub-
stantially similar to, either NSP or WEC) (the "WEC Article
Amendments"), and the by-laws of WEC, and WEC shall take all
actions necessary so that the WEC Article Amendments and such
amendments to the WEC by-laws become effective no later than
the Effective Time; (b) NSP shall cause the articles of incor-
poration of New NSP to be amended and restated in substantially
the form attached hereto as Exhibit 7.20(b); (c) WEC shall
cause the articles of incorporation of WEC Sub to be amended
and restated in the form attached hereto as Exhibit 7.20(c) and
shall cause WEC Sub to issue to WEC additional fully paid
shares of WEC Sub's common stock so that, at the Effective
Time, the number of outstanding shares of common stock of WEC
Sub is equal to the number of outstanding shares of NSP Common
Stock at such time.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Mergers. The respective obligations of each party
to effect the Mergers shall be subject to the satisfaction on
or prior to the Closing Date of the following conditions, ex-
cept, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto:
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(a) Shareholder Approvals. The WEC Shareholders'
Approval and the NSP Shareholders' Approval shall have
been obtained.
(b) No Injunction. No temporary restraining order
or preliminary or permanent injunction or other order by
any federal or state court preventing consummation of the
Mergers shall have been issued and be continuing in ef-
fect, and the Mergers and the other transactions contem-
plated hereby shall not have been prohibited under any
applicable federal or state law or regulation.
(c) Registration Statement. The Registration
Statement shall have become effective in accordance with
the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and
remain in effect.
(d) Listing of Shares. The shares of Company Common
Stock issuable in the Mergers pursuant to Article II shall
have been approved for listing on the NYSE upon official
notice of issuance.
(e) Statutory Approvals. The NSP Required Statutory
Approvals and the WEC Required Statutory Approvals shall
have been obtained at or prior to the Effective Time, such
approvals shall have become Final Orders (as defined be-
low) and such Final Orders do not impose terms or con-
ditions which, in the aggregate, would have, or insofar as
reasonably can be foreseen, could have, a material adverse
effect on the business, assets, financial condition or
results of operations of the Company and its prospective
subsidiaries taken as a whole or on the Company's pro-
spective utility subsidiaries located in the State of
Minnesota taken as a whole, or on its prospective utility
subsidiaries located in the State of Wisconsin taken as a
whole or which would be materially inconsistent with the
agreements of the parties contained herein. A "Final Or-
der" means action by the relevant regulatory authority
which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting
period prescribed by law before the transactions contem-
plated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transac-
tions prescribed by law, regulation or order have been
satisfied.
(f) Dissenters' Rights. The number of NSP Dissent-
ing Shares shall not constitute more than 5% of the number
of issued and outstanding shares of Old NSP Common Stock
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and Old NSP Preferred Stock, taken together as a single
class, for this purpose.
(g) Pooling. Each of NSP and WEC shall have re-
ceived a letter of its independent public accountants,
dated the Closing Date, in form and substance reasonably
satisfactory, in each case, to NSP and WEC, stating that
the transactions effected pursuant to this Agreement will
qualify as a pooling of interests transaction under GAAP
and applicable SEC regulations.
Section 8.2 Conditions to Obligation of WEC to Ef-
fect the Mergers. The obligation of WEC to effect the NSP
Merger shall be further subject to the satisfaction, on or
prior to the Closing Date, of the following conditions, except
as may be waived by WEC in writing pursuant to Section 9.5:
(a) Performance of Obligations of NSP. NSP (and/or
its appropriate subsidiaries) will have performed its
agreements and covenants contained in Sections 6.1(b) and
6.1(c) and Section 7.19 and will have performed in all
material respects its other agreements and covenants con-
tained in or contemplated by this Agreement and the NSP
Stock Option Agreement required to be performed by it at
or prior to the Effective Time.
(b) Representations and Warranties. The represen-
tations and warranties of NSP set forth in this Agreement
and the NSP Stock Option Agreement shall be true and cor-
rect (i) on and as of the date hereof and (ii) on and as
of the Closing Date with the same effect as though such
representations and warranties had been made on and as of
the Closing Date (except for representations and warran-
ties that expressly speak only as of a specific date or
time other than the date hereof or the Closing Date which
need only be true and correct as of such date or time)
except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct
(without regard to any materiality qualifications con-
tained therein) which, individually or in the aggregate,
would not be reasonably likely to result in a NSP Material
Adverse Effect.
(c) Closing Certificates. WEC shall have received a
certificate signed by the chief financial officer of NSP,
dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in
Section 8.2(a) and Section 8.2(b) have been satisfied.
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(d) NSP Material Adverse Effect. No NSP Material
Adverse Effect shall have occurred and there shall exist
no fact or circumstance which is reasonably likely to have
a NSP Material Adverse Effect.
(e) Tax Ruling and Opinion. WEC shall have received
(i) a private letter ruling from the Internal Revenue
Service ("IRS") providing certain assurances regarding the
federal income tax consequences of the Mergers satisfac-
tory in form and substance to Skadden, Arps, Slate,
Meagher & Flom and Quarles & Brady and (ii) an opinion of
Skadden, Arps, Slate, Meagher & Flom or Quarles & Brady
based upon such ruling and satisfactory in form and
substance to WEC, dated as of the Closing Date, to the
effect that the Reincorporation Merger and the subsequent
NSP Merger will each be treated as a tax-free reorganiza-
tion under Section 368(a) of the Code.
(f) NSP Required Consents. The NSP Required Con-
sents the failure of which to obtain would have a NSP Ma-
terial Adverse Effect shall have been obtained.
(g) Affiliate Agreements. The Company shall have
received Affiliate Agreements, duly executed by each "af-
filiate" of NSP, substantially in the form of Exhibit 7.8,
as provided in Section 7.8.
Section 8.3 Conditions to Obligation of NSP to Ef-
fect the Mergers. The obligation of NSP to effect the NSP
Merger shall be further subject to the satisfaction, on or
prior to the Closing Date, of the following conditions, except
as may be waived by NSP in writing pursuant to Section 9.5:
(a) Performance of Obligations of WEC. WEC (and/or
its appropriate subsidiaries) will have performed its
agreements and covenants contained in Sections 6.1(b) and
6.1(c) and will have performed in all material respects
its other agreements and covenants contained in or con-
templated by this Agreement and the WEC Stock Option
Agreement required to be performed at or prior to the Ef-
fective Time.
(b) Representations and Warranties. The represen-
tations and warranties of WEC set forth in this Agreement
and the WEC Stock Option Agreement shall be true and cor-
rect (i) on and as of the date hereof and (ii) on and as
of the Closing Date with the same effect as though such
representations and warranties had been made on and as of
the Closing Date (except for representations and warran-
ties that expressly speak only as of a specific date or
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time other than the date hereof or the Closing Date which
need only be true and correct as of such date or time)
except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct
(without regard to any materiality qualifications con-
tained therein) which, individually or in the aggregate,
would not be reasonably likely to result in a WEC Material
Adverse Effect.
(c) Closing Certificates. NSP shall have received a
certificate signed by the chief financial officer of WEC,
dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in
Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) WEC Material Adverse Effect. No WEC Material
Adverse Effect shall have occurred and there shall exist
no fact or circumstance which is reasonably likely to have
a WEC Material Adverse Effect.
(e) Tax Ruling and Opinion. NSP shall have received
(i) a private letter ruling from the IRS providing certain
assurances regarding the federal income tax consequences
of the Mergers satisfactory in form and substance to
Wachtell, Lipton, Rosen & Katz and (ii) an opinion of
Wachtell, Lipton, Rosen & Katz based upon such ruling and
satisfactory in form and substance to NSP, dated as of the
Closing Date, to the effect that the Reincorporation
Merger and the subsequent NSP Merger will each be treated
as a tax-free reorganization under Section 368(a) of the
Code.
(f) WEC Required Consents. The WEC Required Con-
sents the failure of which to obtain would have a WEC Ma-
terial Adverse Effect shall have been obtained.
(g) Affiliate Agreements. The Company shall have
received Affiliate Agreements, duly executed by each "af-
filiate" of WEC substantially in the form of Exhibit 7.8,
as provided in Section 7.8.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be
terminated at any time prior to the Closing Date, whether be-
fore or after approval by the shareholders of the respective
parties hereto contemplated by this Agreement:
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(a) by mutual written consent of the Boards of Di-
rectors of NSP and WEC;
(b) by any party hereto, by written notice to the
other parties, if the Effective Time shall not have oc-
curred on or before April 30, 1997 (the "Initial Termi-
nation Date"); provided, however, that the right to ter-
minate the Agreement under this Section 9.1(b) shall not
be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on
or before this date; and provided, further, that if on the
Initial Termination Date the conditions to the Closing set
forth in Sections 8.1(e), 8.2(f) and/or 8.3(f) shall not
have been fulfilled but all other conditions to the Clos-
ing shall be fulfilled or shall be capable of being ful-
filled, then the Initial Termination Date shall be ex-
tended to October 31, 1997;
(c) by any party hereto, by written notice to the
other parties, if the WEC Shareholders' Approval shall not
have been obtained at a duly held WEC Special Meeting,
including any adjournments thereof, or the NSP Sharehold-
ers' Approval shall not have been obtained at a duly held
NSP Special Meeting, including any adjournments thereof;
(d) by any party hereto, if any state or federal
law, order, rule or regulation is adopted or issued, which
has the effect, as supported by the written opinion of
outside counsel for such party, of prohibiting the NSP
Merger, or by any party hereto if any court of competent
jurisdiction in the United States or any State shall have
issued an order, judgment or decree permanently restrain-
ing, enjoining or otherwise prohibiting the NSP Merger,
and such order, judgment or decree shall have become final
and nonappealable;
(e) by WEC, upon two days' prior notice to NSP, if,
as a result of a tender offer by a party other than NSP or
any of its affiliates or any written offer or proposal
with respect to a merger, sale of a material portion of
its assets or other business combination (each, a "Busi-
ness Combination") by a party other than NSP or any of its
affiliates, the Board of Directors of WEC determines in
good faith that their fiduciary obligations under appli-
cable law require that such tender offer or other written
offer or proposal be accepted; provided, however, that (i)
the Board of Directors of WEC shall have been advised in a
written opinion of outside counsel that notwithstanding a
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binding commitment to consummate an agreement of the na-
ture of this Agreement entered into in the proper exercise
of their applicable fiduciary duties, and notwithstanding
all concessions which may be offered by NSP in negotia-
tions entered into pursuant to clause (ii) below, such
fiduciary duties would also require the directors to re-
consider such commitment as a result of such tender offer
or other written offer or proposal; and (ii) prior to any
such termination, WEC shall, and shall cause its respec-
tive financial and legal advisors to, negotiate with NSP
to make such adjustments in the terms and conditions of
this Agreement as would enable WEC to proceed with the
transactions contemplated herein on such adjusted terms;
(f) by NSP, upon two days' prior notice to WEC, if,
as a result of a tender offer by a party other than WEC or
any of its affiliates or any written offer or proposal
with respect to a Business Combination by a party other
than WEC or any of its affiliates, the Board of Directors
of NSP determines in good faith that their fiduciary ob-
ligations under applicable law require that such tender
offer or other written offer or proposal be accepted;
provided, however, that (i) the Board of Directors of NSP
shall have been advised in a written opinion of outside
counsel that notwithstanding a binding commitment to con-
summate an agreement of the nature of this Agreement en-
tered into in the proper exercise of their applicable fi-
duciary duties, and notwithstanding all concessions which
may be offered by WEC in negotiations entered into pursu-
ant to clause (ii) below, such fiduciary duties would also
require the directors to reconsider such commitment as a
result of such tender offer or other written offer or
proposal; and (ii) prior to any such termination, NSP
shall, and shall cause its respective financial and legal
advisors to, negotiate with WEC to make such adjustments
in the terms and conditions of this Agreement as would
enable NSP to proceed with the transactions contemplated
herein on such adjusted terms;
(g) by NSP, by written notice to WEC, if (i) there
exist breaches of the representations and warranties of
WEC made herein as of the date hereof which breaches, in-
dividually or in the aggregate, would or would be rea-
sonably likely to result in an WEC Material Adverse Ef-
fect, and such breaches shall not have been remedied
within 20 days after receipt by WEC of notice in writing
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from NSP, specifying the nature of such breaches and re-
questing that they be remedied, (ii) WEC (and/or its ap-
propriate subsidiaries) shall not have performed and com-
plied with its agreements and covenants contained in Sec-
tions 6.1(b) and 6.1(c) or shall have failed to perform
and comply with, in all material respects, its other
agreements and covenants hereunder or under the WEC Stock
Option Agreement and such failure to perform or comply
shall not have been remedied within 20 days after receipt
by WEC of notice in writing from NSP, specifying the na-
ture of such failure and requesting that it be remedied;
or (iii) the Board of Directors of WEC or any committee
thereof (A) shall withdraw or modify in any manner adverse
to NSP its approval or recommendation of this Agreement or
the NSP Merger, (B) shall fail to reaffirm such approval
or recommendation upon NSP's request, (C) shall approve or
recommend any acquisition of WEC or a material portion of
its assets or any tender offer for shares of capital stock
of WEC, in each case, by a party other than NSP or any of
its affiliates or (D) shall resolve to take any of the
actions specified in clause (A), (B) or (C); or
(h) by WEC, by written notice to NSP, if (i) there
exist material breaches of the representations and war-
ranties of NSP made herein as of the date hereof which
breaches, individually or in the aggregate, would or would
be reasonably likely to result in a NSP Material Adverse
Effect, and such breaches shall not have been remedied
within 20 days after receipt by NSP of notice in writing
from WEC, specifying the nature of such breaches and re-
questing that they be remedied, (ii) NSP (and/or its ap-
propriate subsidiaries) shall not have performed and com-
plied with its agreements and covenants contained in Sec-
tions 6.1(b) and 6.1(c) or shall have failed to perform
and comply with, in all material respects, its other
agreements and covenants hereunder or under the NSP Stock
Option Agreement, and such failure to perform or comply
shall not have been remedied within 20 days after receipt
by NSP of notice in writing from WEC, specifying the na-
ture of such failure and requesting that it be remedied;
or (iii) the Board of Directors of NSP or any committee
thereof (A) shall withdraw or modify in any manner adverse
to WEC its approval or recommendation of this Agreement or
the NSP Merger, (B) shall fail to reaffirm such approval
or recommendation upon WEC's request, (C) shall approve or
recommend any acquisition of NSP or a material portion of
its assets or any tender offer for the shares of capital
stock of NSP, in each case by a party other than WEC or
any of its affiliates or (D) shall resolve to take any of
the actions specified in clause (A), (B) or (C).
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Section 9.2 Effect of Termination. Subject to Sec-
tion 10.1(b), in the event of termination of this Agreement by
either NSP or WEC pursuant to Section 9.1 there shall be no
liability on the part of either NSP or WEC or their respective
officers or directors hereunder, except that Section 7.17 and
Section 9.3, the agreement contained in the last sentence of
Section 7.1, Section 10.2 and Section 10.8 shall survive the
termination.
Section 9.3 Termination Fee; Expenses.
(a) Termination Fee upon Breach or Withdrawal of
Approval. If this Agreement is terminated at such time that
this Agreement is terminable pursuant to one (but not both) of
(x) Section 9.1(g)(i) or (ii) or (y) Section 9.1(h)(i) or (ii),
then: (i) the breaching party shall promptly (but not later
than five business days after receipt of notice from the non-
breaching party) pay to the non-breaching party in cash an
amount equal to all documented out-of-pocket expenses and fees
incurred by the non-breaching party (including, without limi-
tation, fees and expenses payable to all legal, accounting,
financial, public relations and other professional advisors
arising out of, in connection with or related to the Mergers or
the transactions contemplated by this Agreement) not in excess
of $10 million; provided, however, that, if this Agreement is
terminated by a party as a result of a willful breach by the
other party, the non-breaching party may pursue any remedies
available to it at law or in equity and shall, in addition to
its out-of-pocket expenses (which shall be paid as specified
above and shall not be limited to $10 million), be entitled to
retain such additional amounts as such non-breaching party may
be entitled to receive at law or in equity; and (ii) if (x) at
the time of the breaching party's willful breach of this
Agreement, there shall have been a third party tender offer for
shares of, or a third party offer or proposal with respect to a
Business Combination involving, such party or any of its af-
filiates which at the time of such termination shall not have
been rejected by such party and its board of directors and
withdrawn by the third party, and (y) within two and one-half
years of any termination by the non-breaching party, the
breaching party or an affiliate thereof becomes a subsidiary of
such offeror or a subsidiary of an affiliate of such offeror or
accepts a written offer to consummate or consummates a Business
Combination with such offeror or an affiliate thereof, then
such breaching party (jointly and severally with its affili-
ates), upon the signing of a definitive agreement relating to
such a Business Combination, or, if no such agreement is signed
then at the closing (and as a condition to the closing) of such
breaching party becoming such a subsidiary or of such Business
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Combination, will pay to the non-breaching party an additional
fee equal to $75 million in cash.
(b) Additional Termination Fee. If (i) this Agree-
ment (x) is terminated by any party pursuant to Section 9.1(e)
or Section 9.1(f), (y) is terminated following a failure of the
shareholders of any one of the parties to grant the necessary
approvals described in Section 4.13 and Section 5.13 or (z) is
terminated as a result of such party's material breach of Sec-
tion 7.4, and (ii) at the time of such termination or prior to
the meeting of such party's shareholders there shall have been
a third-party tender offer for shares of, or a third-party of-
fer or proposal with respect to a Business Combination involv-
ing, such party or any of its affiliates which at the time of
such termination or of the meeting of such party's shareholders
shall not have been (A) rejected by such party and its board of
directors and (B) withdrawn by the third-party, and (iii)
within two and one-half years of any such termination described
in clause (i) above, the party or its affiliate which is the
subject of the tender offer or offer or proposal with respect
to a Business Combination (the "Target Party") becomes a sub-
sidiary of such offeror or a subsidiary of an affiliate of such
offeror or accepts a written offer to consummate or consummates
a Business Combination with such offeror or affiliate thereof,
then such Target Party (jointly and severally with its affil-
iates), upon the signing of a definitive agreement relating to
such a Business Combination, or, if no such agreement is
signed, then at the closing (and as a condition to the closing)
of such Target Party becoming such a subsidiary or of such
Business Combination, will pay to the other party a termination
fee equal to $75 million in cash plus the out-of-pocket fees
and expenses incurred by the non-breaching party (including,
without limitation, fees and expenses payable to all legal,
accounting, financial, public relations and other professional
advisors arising out of, in connection with or related to the
Mergers or the transactions contemplated by this Agreement).
(c) Expenses. The parties agree that the agreements
contained in this Section 9.3 are an integral part of the
transactions contemplated by the Agreement and constitute liq-
uidated damages and not a penalty. If one party fails to
promptly pay to the other any fee due hereunder, the defaulting
party shall pay the costs and expenses (including legal fees
and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee
at the publicly announced prime rate of Citibank, N.A. from the
date such fee was required to be paid.
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(d) Limitation of Termination Fees. Notwithstanding
anything herein to the contrary, the aggregate amount payable
to NSP and its affiliates pursuant to Section 9.3(a), Section
9.3(b) and the terms of the WEC Stock Option Agreement shall
not exceed $125 million and the aggregate amount payable to WEC
and its affiliates pursuant to Section 9.3(a), Section 9.3(b)
and the terms of the NSP Stock Option Agreement shall not ex-
ceed $125 million (including reimbursement for fees and ex-
penses payable pursuant to this Section 9.3). For purposes of
this Section 9.3(d), the amount payable pursuant to the terms
of the WEC Stock Option Agreement or the NSP Stock Option
Agreement, as the case may be, shall be the amount paid pursu-
ant to Section 7(a)(i) and 7(a)(ii) thereof.
Section 9.4 Amendment. This Agreement may be
amended by the Boards of Directors of the parties hereto, at
any time before or after approval hereof by the shareholders of
NSP and WEC and prior to the Effective Time, but after such
approvals, no such amendment shall (i) alter or change the
amount or kind of shares, rights or any of the proceedings of
the treatment of shares under Article II, (ii) alter or change
any of the terms and conditions of this Agreement if any of the
alterations or changes, alone or in the aggregate, would mate-
rially adversely affect the rights of holders of Old NSP Common
Stock or WEC Common Stock, or (iii) alter or change any term of
the Restated Articles of Incorporation of WEC (including the
WEC Article Amendments) as approved by the shareholders of WEC,
except for alterations or changes that could otherwise be
adopted by the Board of Directors of the Company, without the
further approval of such shareholders, as applicable. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Ef-
fective Time, the parties hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the repre-
sentations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein, to the extent
permitted by applicable law. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such
party.
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations
and Warranties. (a) All representations, warranties and
agreements in this Agreement shall not survive the Mergers,
except as otherwise provided in this Agreement and except for
the agreements contained in this Section 10.1 and in Article
II, Section 7.5, Section 7.9, Section 7.10, Section 7.11, Sec-
tion 7.14, Section 7.15, Section 7.16, Section 7.17 and Section
10.7.
(b) No party may assert a claim for breach of any
representation or warranty contained in this Agreement (whether
by direct claim or counterclaim) except in connection with the
cancellation of this Agreement pursuant to Section 9.1(g)(i) or
Section 9.1(h)(i) (or pursuant to any other subsection of Sec-
tion 9.1, if the terminating party would have been entitled to
terminate this Agreement pursuant to Section 9.1(g)(i) or Sec-
tion 9.1(h)(i)).
Section 10.2 Brokers. NSP represents and warrants
that, except for Goldman, Sachs & Co. whose fees have been
disclosed to WEC prior to the date hereof, no broker, finder or
investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Mergers or the
transactions contemplated by this Agreement based upon ar-
rangements made by or on behalf of NSP. WEC represents and
warrants that, except for Barr Devlin Associates, whose fees
have been disclosed to NSP prior to the date hereof, no broker,
finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the
Mergers or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of WEC.
Section 10.3 Notices. All notices and other commu-
nications hereunder shall be in writing and shall be deemed
given if (i) delivered personally, (ii) sent by reputable
overnight courier service, (iii) telecopied (which is con-
firmed), or (iv) five days after being mailed by registered or
certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) If to NSP, to:
Northern States Power Company
414 Nicollet Mall
Minneapolis, Minnesota 55401
Attention: Gary Johnson, Esq.
Telephone: (612) 330-7623
Telecopy: (612) 330-6222
with a copy to:
Gardner, Carton & Douglas
Quaker Tower, 31st Floor
321 North Clark Street
Chicago, Illinois 60610-4795
Attention: Peter Clarke, Esq.
Telephone: (312) 245-8685
Telecopy: (312) 644-3381
and a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Barry A. Bryer, Esq.
Seth A. Kaplan, Esq.
Telephone: (212) 403-1000
Telecopy: (212) 403-2000
(b) If to WEC, to:
Wisconsin Energy Corporation
231 West Michigan Street
Milwaukee, WI 53201
Attention: Walter T. Woelfle, Esq.
Telephone: (414) 221-2765
Telecopy: (414) 221-2412
-72-
with a copy to:
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Patrick M. Ryan, Esq.
Telephone: (414) 277-5181
Telecopy: (414) 277-5174
and a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Sheldon S. Adler, Esq.
Telephone: (212) 735-3000
Telecopy: (212) 735-2000
Section 10.4 Miscellaneous. This Agreement (in-
cluding the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter
hereof other than the Confidentiality Agreement; (ii) shall not
be assigned by operation of law or otherwise; and (iii) shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed in and to be
fully performed in such State, without giving effect to its
conflicts of law, rules or principles and except to the extent
the provisions of this Agreement (including the documents or
instruments referred to herein) are expressly governed by or
derive their authority from the MBCA or the WBCL.
Section 10.5 Interpretation. When a reference is
made in this Agreement to Sections or Exhibits, such reference
shall be to a Section or Exhibit of this Agreement, respec-
tively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpre-
tation of this Agreement. Whenever the words "include", "in-
cludes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
Section 10.6 Counterparts; Effect. This Agreement
may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall con-
stitute one and the same agreement.
-73-
Section 10.7 Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, except for rights of Indemnified Parties as
set forth in Section 7.5, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this
Agreement. Notwithstanding the foregoing and any other provi-
sion of this Agreement, and in addition to any other required
action of the Board of Directors of the Company (a) a majority
of the WEC Directors (or their successors) serving on the Board
of Directors of the Company who are designated by WEC pursuant
to Section 7.13 shall be entitled during the three year period
commencing at the Effective Time (the "Three Year Period") to
enforce the provisions of Section 7.9, Section 7.10, Section
7.11 and Section 7.14 on behalf of the WEC officers, directors
and employees, as the case may be, and (b) a majority of the
NSP directors (or their successors) serving on the Board of
Directors of the Company who are designated by NSP pursuant to
Section 7.13 shall be entitled during the Three Year Period to
enforce the provisions of, Sections 7.9, Section 7.10, Section
7.11, and Section 7.14 on behalf of the NSP officers, directors
and employees, as the case may be. Such directors' rights and
remedies under the preceding sentence are cumulative and are in
addition to any other rights and remedies they may have at law
or in equity, but in no event shall this Section 10.7 be deemed
to impose any additional duties on any such directors. The
Company shall pay, at the time they are incurred, all costs,
fees and expenses of such directors incurred in connection with
the assertion of any rights on behalf of the persons set forth
above pursuant to this Section 10.7.
Section 10.8 Waiver of Jury Trial and Certain Dam-
ages. Each party to this Agreement waives, to the fullest ex-
tent permitted by applicable law, (i) any right it may have to
a trial by jury in respect of any action, suit or proceeding
arising out of or relating to this Agreement and (ii) without
limitation to Section 9.3, any right it may have to receive
damages from any other party based on any theory of liability
for any special, indirect, consequential (including lost prof-
its) or punitive damages.
Section 10.9 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the
State of New York or in New York state court, this being in
-74-
addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any
federal court located in the State of New York or any New York
state court in the event any dispute arises out of this Agree-
ment or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny such personal ju-
risdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court
sitting in the State of New York.
-75-
IN WITNESS WHEREOF, NSP, WEC, New NSP and WEC Sub
have caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first written
above.
NORTHERN STATES POWER COMPANY
By: /s/ JAMES J. HOWARD
Name: James J. Howard
Attest: /s/ GARY R. JOHNSON Title: Chairman and Chief
Secretary Executive Officer
WISCONSIN ENERGY CORPORATION
By: /s/ RICHARD A. ABDOO
Name: Richard A. Abdoo
Attest: /s/ JOHN H. GOETSCH__ Title: Chairman, President
Secretary and Chief Executive
Officer
NORTHERN POWER WISCONSIN CORP.
By: /s/ EDWARD J. McINTYRE
Name: Edward J. McIntyre
Attest: /s/ GARY R. JOHNSON Title: President
Secretary
WEC SUB CORP.
By: /s/ RICHARD A. ABDOO
Name: Richard A. Abdoo
Attest: /s/ ANN MARIE BRADY Title: Chairman, President
Secretary and Chief Executive
Officer
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Dates Referenced Herein and Documents Incorporated by Reference
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