AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
WISCONSIN ENERGY CORPORATION
AND
ESELCO, INC.
AND
ESL ACQUISITION, INC.
DATED AS OF MAY 13, 1997
AS AMENDED AND RESTATED AS OF
JULY 11, 1997
TABLE OF CONTENTS
RECITALS 1
ARTICLE I DEFINITIONS
1.1 Accounts 1
1.2 Acquisition 2
1.3 Affiliates 2
1.4 Affiliate Letter 2
1.5 Agreement 2
1.6 Buildings 2
1.7 Certificate of Merger 2
1.8 Closing 2
1.9 Closing Date 2
1.10 Code 3
1.11 Confidentiality Agreement 3
1.12 Contracts 3
1.13 Disclosure Schedule 3
1.14 Edison Sault 3
1.15 Employee Benefit Plans 3
1.16 Equipment 3
1.17 ERISA 4
1.18 ESEG 4
1.19 ESELCO 4
1.20 ESELCO Closing Certificate 4
1.21 ESELCO Common Stock 4
1.22 ESELCO Companies 4
1.23 ESELCO Counsel Opinion 4
1.24 ESELCO DRIP 4
1.25 ESELCO Material Adverse Effect 4
1.26 ESELCO Special Meeting 4
1.27 ESELCO Stockholders 4
1.28 ESELCO SEC Reports 5
1.29 Exchange Act 5
1.30 Existing Contracts 5
1.31 Existing Indebtedness 5
1.32 Existing Insurance Policies 5
1.33 Existing Investments 5
1.34 Existing Liens 6
1.35 Existing Litigation 6
1.36 Existing Permits 6
1.37 Existing Plans 6
1.38 Existing Real Estate 6
1.39 FERC 6
1.40 HSR Act 6
1.41 Indebtedness 7
1.42 Investment 7
1.43 Knowledge of ESELCO 7
1.44 Law 7
1.45 Letter of Intent 7
1.46 Lien 7
1.47 MDCI 8
1.48 MPSC 8
1.49 Merger 8
1.50 NTS 8
1.51 Permitted Liens 8
1.52 Person 8
1.53 Plan of Merger 8
1.54 Proxy Statement 8
1.55 PUHCA 8
1.56 Registration Statement 8
1.57 SEC 9
1.58 Securities Act 9
1.59 Subsidiary 9
1.60 Wisconsin Energy 9
1.61 Wisconsin Energy Closing Certificate 9
1.62 Wisconsin Energy Counsel Opinion 9
1.63 Wisconsin Energy Common Stock 9
1.64 Wisconsin Energy SEC Reports 9
1.65 Other Terms 10
ARTICLE II THE MERGER
2.1 The Merger 11
2.2 Effective Time of Merger 11
2.3 Articles of Incorporation of Surviving Corporation 11
2.4 Bylaws of Surviving Corporation 11
2.5 Directors and Officers of Surviving Corporation 12
2.6 Conversion of ESELCO Common Stock 12
2.7 Conversion of Acquisition Common Stock 12
2.8 Exchange of ESELCO Certificates 13
2.9 Stock Transfer Books 16
2.10 Reorganization; Pooling 16
2.11 Dissenters' Rights 17
- ii -
ARTICLE III OTHER AGREEMENTS
3.1 Proxy Statement and Registration Statement 17
3.2 Approval of ESELCO Stockholders 17
3.3 Access 18
3.4 Disclosure Schedule 18
3.5 Duties Concerning Representations 19
3.6 Deliveries of Information; Consultation 20
3.7 Affiliates; Accounting and Tax Treatment 21
3.8 Other Transactions 22
3.9 Letter of ESELCO's Accountants 24
3.10 Letter of Wisconsin Energy's Accountants 25
3.11 Legal Conditions to Merger 25
3.12 Stock Exchange Listing 25
3.13 Public Announcements 25
3.14 Indemnification and Insurance 26
3.15 Employment Matters 26
- iii -
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ESELCO
4.1 Organization; Business 31
4.2 Capitalization 33
4.3 Authorization; Enforceability 34
4.4 No Violation or Conflict 34
4.5 Title to Assets 34
4.6 Litigation 35
4.7 ESELCO SEC Reports and Books and Records 35
4.8 Absence of Certain Changes 36
4.9 Buildings and Equipment 36
4.10 Existing Contracts 37
4.11 Performance of Contracts 38
4.12 Contingent and Undisclosed Liabilities 38
4.13 Existing Insurance Policies 38
4.14 Employee Benefit Plans 38
4.15 No Violation of Law 40
4.16 Brokers 40
4.17 Taxes 40
4.18 Existing Real Estate 41
4.19 Governmental Approvals 42
4.20 No Pending Other Transactions 42
4.21 Investments 42
4.22 Labor Matters 43
4.23 Indebtedness 43
4.24 Subsidiaries 43
4.25 Existing Permits 44
4.26 Disclosure 44
4.27 Information Supplied 44
4.28 Vote Required 44
4.29 Accounting Matters 44
4.30 Opinion of Financial Advisor 45
4.31 Environmental Protection 45
4.32 Accounts 47
4.33 Customers 47
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
WISCONSIN ENERGY AND ACQUISITION
5.1 Organization 48
5.2 Capitalization 48
5.3 Authorization; Enforceability 49
5.4 No Violation or Conflict 49
5.5 Litigation 49
5.6 Wisconsin Energy SEC Reports 49
5.7 Brokers 50
- iv -
5.8 Governmental Approvals 50
5.9 Disclosure 50
5.10 Information Supplied 51
ARTICLE VI CONDUCT OF BUSINESS BY THE ESELCO COMPANIES
PENDING THE MERGER
6.1 Carry on in Regular Course 51
6.2 Use of Assets 52
6.3 No Default 52
6.4 Existing Insurance Policies 52
6.5 Employment Matters 52
6.6 Contracts and Commitments 52
6.7 Indebtedness; Investments 52
6.8 Preservation of Relationships 52
6.9 Compliance with Laws 52
6.10 Taxes 52
6.11 Amendments 53
6.12 Dividends; Redemptions; Issuance of Stock 53
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
WISCONSIN ENERGY AND ACQUISITION
7.1 Compliance with Agreement 54
7.2 Proceedings and Instruments Satisfactory 54
7.3 No Litigation 54
7.4 Representations and Warranties of ESELCO 54
7.5 No ESELCO Material Adverse Effect 54
7.6 Approval of ESELCO Stockholders; Certificate of Merger 55
7.7 Deliveries at Closing 55
7.8 Other Documents 55
7.9 Governmental Approvals 55
7.10 Listing 56
7.11 Tax Opinion 56
7.12 Accountant Letters 56
7.13 Pooling Opinion 57
7.14 Affiliate Letters 57
7.15 Fractional Shares 57
ARTICLE VIII CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF ESELCO
8.1 Compliance with Agreement 58
8.2 Proceedings and Instruments Satisfactory 58
8.3 No Litigation 58
8.4 Representations and Warranties of Wisconsin Energy and Acquisition 58
8.5 Approval of ESELCO Stockholders; Certificate of Merger 58
- v -
8.6 Deliveries at Closing 59
8.7 Other Documents 59
8.8 Governmental Approvals 59
8.9 Tax Opinion 59
8.10 Accountant Letters 60
8.11 No Material Adverse Change 60
8.12 Listing 60
ARTICLE IX TERMINATION; MISCELLANEOUS
9.1 Termination 60
9.2 Rights on Termination; Waiver 61
9.3 Survival of Representations, Warranties and Covenants 62
9.4 Entire Agreement; Amendment 62
9.5 Expenses 62
9.6 Governing Law 63
9.7 Assignment 63
9.8 Notices 63
9.9 Counterparts; Headings 64
9.10 Interpretation 64
9.11 Severability 65
9.12 Specific Performance 65
9.13 No Reliance 65
9.14 Exhibits and Disclosure Schedule 65
9.15 Further Assurances 65
SIGNATURES 66
EXHIBITS:
1. Form of Affiliate Letter
2. Form of ESELCO Closing Certificate
3. Form of ESELCO Counsel Opinion
4. Form of Plan of Merger
5. Form of Wisconsin Energy Closing Certificate
6. Form of Wisconsin Energy Counsel Opinion
- vi -
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION is
made as of this 13th day of May, 1997 as amended and restated as of July 11,
1997 by and among WISCONSIN ENERGY CORPORATION, ESELCO, INC. AND ESL
ACQUISITION, INC.
RECITALS
WHEREAS, the respective Boards of Directors of Wisconsin Energy,
ESELCO and Acquisition have: (a) determined that the merger of Acquisition
with and into ESELCO pursuant to, and subject to all of the terms and
conditions of, this Agreement is advisable, fair and in the best interests of
Wisconsin Energy, ESELCO and Acquisition and their respective shareholders;
and (b) approved the Merger, this Agreement and the transactions contemplated
by this Agreement; and
WHEREAS, the Board of Directors of ESELCO has directed that this
Agreement and the transactions described in this Agreement be submitted for
approval at the ESELCO Special Meeting.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified:
1.1 ACCOUNTS. "Accounts" shall mean all accounts receivable, notes
and associated rights owned by any of the ESELCO Companies.
-1-
1.2 ACQUISITION. "Acquisition" shall mean ESL Acquisition, Inc., a
Michigan corporation and a wholly-owned subsidiary of Wisconsin Energy.
1.3 AFFILIATES. "Affiliates" shall mean all Persons who are
affiliates of ESELCO for purposes of Rule 145 under the Securities Act.
1.4 AFFILIATE LETTER. "Affiliate Letter" shall mean a letter from
each Affiliate in substantially the form of Exhibit 1 attached to this
Agreement.
1.5 AGREEMENT. "Agreement" shall mean this Amended and Restated
Agreement and Plan of Reorganization, together with the Exhibits attached
hereto and together with the Disclosure Schedule, as the same may be amended
from time to time in accordance with the terms hereof.
1.6 BUILDINGS. "Buildings" shall mean all buildings, fixtures,
structures and improvements used by any of the ESELCO Companies and located
on the Existing Real Estate.
1.7 CERTIFICATE OF MERGER. "Certificate of Merger" shall
mean a Certificate of Merger in a form approved for filing with the
MDCI which shall have the executed Plan of Merger attached thereto.
1.8 CLOSING. "Closing" shall mean the conference to be
held at 10:00 A.M., Central Time, on the Closing Date at the offices
of Xxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000, or such other time and place as the parties may mutually agree
to in writing, at which the transactions contemplated by this
Agreement shall be consummated.
1.9 CLOSING DATE. "Closing Date" shall mean:
(a) December 30, 1997; or
(b) if all of the consents and approvals specified in
Sections 7.9 and 8.8 of this Agreement have not been received on or
before December 23, 1997, that date which is five (5) business days
after receipt of the last of such consents and approvals, subject in
each case to the provisions of Section 9.1(g) of this Agreement; or
-2-
(c) such other date as the parties may mutually agree
to in writing.
1.10 CODE. "Code" shall mean the Internal Revenue Code of
1986, as the same may be in effect from time to time.
1.11 CONFIDENTIALITY AGREEMENT. "Confidentiality Agreement"
shall mean the letter agreement between Wisconsin Energy and ESELCO
dated January 16, 1997 as amended by this Agreement.
1.12 CONTRACTS. "Contracts" shall mean all of the
contracts, agreements and leases, written or oral, to which any of the
ESELCO Companies is a party or by which any of the ESELCO Companies is
bound.
1.13 DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean
the Disclosure Schedule dated May 13, 1997 delivered by ESELCO to
Wisconsin Energy and as the same may be amended from time to time
after May 13, 1997 and prior to the Closing Date in accordance with
the terms of this Agreement.
1.14 EDISON SAULT. "Edison Sault" shall mean Edison Sault
Electric Company, a Michigan corporation and a wholly-owned subsidiary
of ESELCO.
1.15 EMPLOYEE BENEFIT PLANS. "Employee Benefit Plans" shall
mean any pension plan, profit sharing plan, bonus plan, incentive
compensation plan, stock ownership plan, stock purchase plan, stock
option plan, stock appreciation plan, employee benefit plan, employee
benefit policy, retirement plan, fringe benefit program, insurance
plan, severance plan, disability plan, health care plan, sick leave
plan, death benefit plan, or any other plan or program to provide
retirement income, fringe benefits or other benefits to former or
current employees of any of the ESELCO Companies.
1.16 EQUIPMENT. "Equipment" shall mean all machinery,
toolings, equipment, boilers, furniture, fixtures, motor vehicles,
furnishings, molds, parts, tools, dies, jigs, patterns, machine tools,
office equipment, computers, construction in progress and other items
of tangible personal property owned by any of the ESELCO Companies
which are either presently used, or are used on the Closing Date, by
any of the ESELCO Companies in the conduct of its business.
-3-
1.17 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as the same may be in effect from time to
time.
1.18 ESEG. "ESEG" shall mean ESEG, Inc., a Michigan
corporation and a wholly-owned subsidiary of ESELCO.
1.19 ESELCO. "ESELCO" shall mean ESELCO, Inc., a Michigan
corporation.
1.20 ESELCO CLOSING CERTIFICATE. "ESELCO Closing
Certificate" shall mean the Closing Certificate of ESELCO in
substantially the form of Exhibit 2 attached to this Agreement.
1.21 ESELCO COMMON STOCK. "ESELCO Common Stock" shall mean
all of the issued and outstanding shares of common stock, $0.01 par
value, of ESELCO.
1.22 ESELCO COMPANIES. "ESELCO Companies" shall mean
ESELCO, Edison Sault, ESEG and NTS.
1.23 ESELCO COUNSEL OPINION. "ESELCO Counsel Opinion" shall
mean an opinion of Xxxxx Xxxx in substantially the form of Exhibit 3
attached to this Agreement.
1.24 ESELCO DRIP. "ESELCO DRIP" shall mean ESELCO's
Dividend Reinvestment and Common Stock Purchase Plan.
1.25 ESELCO MATERIAL ADVERSE EFFECT. "ESELCO Material
Adverse Effect" shall mean any event, condition or fact which is, or
reasonably may be expected to be, materially adverse to the financial
condition, properties, business, results of operations or prospects of
the ESELCO Companies taken as a whole.
1.26 ESELCO SPECIAL MEETING. "ESELCO Special Meeting" shall
mean a special meeting of the ESELCO Stockholders for the purpose of
approving the Merger, this Agreement and the transactions contemplated
by this Agreement and for such other purposes as may be necessary or
desirable.
1.27 ESELCO STOCKHOLDERS. "ESELCO Stockholders" shall mean
all Persons owning shares of ESELCO Common Stock on the relevant date.
-4-
1.28 ESELCO SEC REPORTS. "ESELCO SEC Reports" shall mean:
(a) Reports on Form 10-Q for the quarters ended March
31, 1994, June 30, 1994, September 30, 1994, March 31, 1995, June 30,
1995, September 30, 1995, March 31, 1996, June 30, 1996, September 30,
1996 and March 31, 1997;
(b) Reports on Form 10-K for the years ended December
31, 1993, 1994, 1995 and 1996;
(c) Proxy Statements dated April 1, 1994, April 3,
1995, April 1, 1996 and March 28, 1997;
(d) Reports on Form 8-K dated January 23, 1997, March
25, 1997 and May 13, 1997;
(e) Form U-3A-2 for the years ended December 31, 1995
and 1996; and
(f) all other reports, registration statements,
definitive proxy statements, prospectuses, and amendments thereto
filed by any of the ESELCO Companies with the SEC after the date of
this Agreement and prior to the Effective Time of Merger.
1.29 EXCHANGE ACT. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as the same may be in effect from time to time.
1.30 EXISTING CONTRACTS. "Existing Contracts" shall mean
those Contracts which are listed and briefly described on the
Disclosure Schedule.
1.31 EXISTING INDEBTEDNESS. "Existing Indebtedness" shall
mean all Indebtedness of each of the ESELCO Companies, all of which is
listed and briefly described on the Disclosure Schedule.
1.32 EXISTING INSURANCE POLICIES. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect
and owned by any of the ESELCO Companies, all of which are listed and
briefly described on the Disclosure Schedule.
1.33 EXISTING INVESTMENTS. "Existing Investments" shall
mean all Investments of each of the ESELCO Companies, all
-5-
of which are listed and briefly described on the Disclosure Schedule.
1.34 EXISTING LIENS. "Existing Liens" shall mean all Liens
affecting any of the assets and properties of any of the ESELCO
Companies on the date of this Agreement, all of which are listed and
briefly described on the Disclosure Schedule.
1.35 EXISTING LITIGATION. "Existing Litigation" shall mean
all pending or, to the Knowledge of ESELCO, threatened suits, audit
inquiries, charges, workers compensation claims, product warranty
claims, litigation, arbitrations, proceedings, governmental
investigations, citations and actions of any kind against any of the
ESELCO Companies, all of which are listed and briefly described on the
Disclosure Schedule.
1.36 EXISTING PERMITS. "Existing Permits" shall mean all
licenses, permits, approvals, franchises, qualifications, certificates
of convenience and necessity, permissions, agreements, rate and other
orders and governmental authorizations required for the conduct of the
business of any of the ESELCO Companies, all of which are listed and
briefly described on the Disclosure Schedule.
1.37 EXISTING PLANS. "Existing Plans" shall mean all
Employee Benefit Plans of each of the ESELCO Companies, all of which
are listed and briefly described on the Disclosure Schedule.
1.38 EXISTING REAL ESTATE. "Existing Real Estate" shall
mean those parcels of real property described in the Disclosure
Schedule which: (a) includes those parcels owned in fee simple title
by any of the ESELCO Companies; and (b) excludes easements and any
other real estate interests owned by any of the ESELCO Companies
relating to the distribution and transmission of electricity in the
ordinary course of business.
1.39 FERC. "FERC" shall mean the Federal Energy Regulatory
Commission.
1.40 HSR ACT. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as the same may be in effect from
time to time.
-6-
1.41 INDEBTEDNESS. "Indebtedness" shall mean any liability
or obligation of any of the ESELCO Companies, whether primary or
secondary or absolute or contingent: (a) for borrowed money; or (b)
evidenced by notes, bonds, debentures or similar instruments; or (c)
secured by Liens on any assets of any of the ESELCO Companies.
1.42 INVESTMENT. "Investment" by any of the ESELCO
Companies shall mean: (a) any transfer or delivery of cash, stock or
other property or thing of value in exchange for indebtedness, stock
or any other security of another Person; (b) any loan or advance to,
or capital contribution in, any other Person; (c) any guaranty,
creation or assumption of any liability or obligation of any other
Person; and (d) any investments in any fixed property or fixed assets
other than fixed properties and fixed assets acquired and used in the
ordinary course of the business.
1.43 KNOWLEDGE OF ESELCO. "Knowledge of ESELCO" shall mean
actual knowledge of any one or more of the following named Persons and
knowledge that any one or more of the following named Persons should
have acquired in the ordinary course of performance of that Person's
duties as a director, officer or employee of any of the ESELCO
Companies: Xxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx,
Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx X. Xxxxxxx,
Xxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxx,
Xxxxx X. Xxxxxxxxx and Xxxx X. Xxxxxxxxxx.
1.44 LAW. "Law" shall mean any federal, state, local or
other law, rule, regulation or governmental requirement of any kind,
and the rules, regulations and orders promulgated thereunder by any
regulatory agencies or other Persons.
1.45 LETTER OF INTENT. "Letter of Intent" shall mean the
Letter of Intent by and between Wisconsin Energy and ESELCO dated
March 24, 1997.
1.46 LIEN. "Lien" shall mean, with respect to any asset:
(a) any mortgage, pledge, lien, covenant, lease or security interest;
and (b) the interest of a vendor or lessor under any conditional sale
agreement, financing lease or other title retention agreement relating
to such asset.
-7-
1.47 MDCI. "MDCI" shall mean The Michigan Department of
Consumer and Industry Services-Corporation, Securities and Land
Development Bureau.
1.48 MPSC. "MPSC" shall mean The Michigan Public Service
Commission.
1.49 MERGER. "Merger" shall mean the merger of Acquisition
with and into ESELCO pursuant to this Agreement.
1.50 NTS. "NTS" shall mean Northern Tree Service, Inc., a
Michigan corporation and a wholly-owned subsidiary of ESELCO.
1.51 PERMITTED LIENS. "Permitted Liens" shall mean those of
the Existing Liens which are expressly noted as Permitted Liens on the
Disclosure Schedule.
1.52 PERSON. "Person" shall mean a natural person,
corporation, trust, partnership, governmental entity, agency or branch
or department thereof, or any other legal entity.
1.53 PLAN OF MERGER. "Plan of Merger" shall mean the Plan
of Merger between ESELCO and Acquisition in substantially the form of
Exhibit 4 attached to this Agreement.
1.54 PROXY STATEMENT. "Proxy Statement" shall mean the
proxy statement of ESELCO to be filed with the SEC and to be
distributed to the ESELCO Stockholders in connection with the ESELCO
Special Meeting and the approval of the Merger by the ESELCO
Stockholders, which shall also constitute the prospectus of Wisconsin
Energy filed as a part of the Registration Statement.
1.55 PUHCA. "PUHCA" shall mean the Public Utility Holding
Company Act of 1935, as the same may be in effect from time to time.
1.56 REGISTRATION STATEMENT. "Registration Statement" shall
mean a registration statement on Form S-4 to be filed under the
Securities Act by Wisconsin Energy in connection with the Merger for
purposes of registering the shares of Wisconsin Energy Common Stock to
be issued in the Merger pursuant to Article II of this Agreement.
-8-
1.57 SEC. "SEC" shall mean the Securities and Exchange
Commission.
1.58 SECURITIES ACT. "Securities Act" shall mean the
Securities Act of 1933, as the same may be in effect from time to
time.
1.59 SUBSIDIARY. "Subsidiary" shall mean any corporation,
at least a majority of the outstanding capital stock of which (of any
class or classes, however designated, having ordinary voting power for
the election of at least a majority of the board of directors of such
corporation) shall at the time be owned by the relevant Person
directly or through one or more corporations which are themselves
Subsidiaries.
1.60 WISCONSIN ENERGY. "Wisconsin Energy" shall mean
Wisconsin Energy Corporation, a Wisconsin corporation.
1.61 WISCONSIN ENERGY CLOSING CERTIFICATE. "Wisconsin
Energy Closing Certificate" shall mean the Closing Certificate of
Wisconsin Energy in substantially the form of Exhibit 5 attached to
this Agreement.
1.62 WISCONSIN ENERGY COUNSEL OPINION. "Wisconsin Energy
Counsel Opinion" shall mean the opinion of Xxxxxxx & Xxxxx in
substantially the form of Exhibit 6 attached to this Agreement.
1.63 WISCONSIN ENERGY COMMON STOCK. "Wisconsin Energy
Common Stock" shall mean shares of the common stock, $.01 par value,
of Wisconsin Energy.
1.64 WISCONSIN ENERGY SEC REPORTS. "Wisconsin Energy SEC
Reports" shall mean:
(a) Reports on Form 10-Q for the quarters ended March
31, 1994, June 30, 1994, September 30, 1994, March 31, 1995, June 30,
1995, September 30, 1995, March 31, 1996, June 30, 1996, September 30,
1996 and March 31, 1997;
(b) Reports on Form 10-K for the years ended December
31, 1993, 1994, 1995 and 1996;
(c) Proxy Statements dated March 22, 1994, April 10,
1995, August 7, 1995, April 13, 1996 and March 14, 1997;
-9-
(d) Reports on Form 8-K dated February 1, 1994, May 3,
1995, September 25, 1995 and May 22, 1997; and
(e) all documents filed by Wisconsin Energy with the
SEC after the date of this Agreement and prior to the Effective Time
of Merger pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
1.65 OTHER TERMS. The Following terms shall have the
meanings specified in the following noted Sections of this Agreement:
TERM SECTION
---- -------
1986 Fee Deferral Plan 3.15
1989 Fee Deferral Plan 3.15
Average Wisconsin Energy Price 2.6
CERCLA 4.31
Changeover Date 3.15
Disclosure Schedule Change 3.4
Edison Sault Management Plan 3.15
Effective Time of Merger 2.2
Environmental Claim 4.31
Environmental Hazardous Material 4.31
Environmental Laws 4.31
Environmental Permits 4.31
Environmental Release 4.31
ESELCO Certificates 2.8
ESELCO Director Plan 3.15
ESELCO Retiree Health Plan 3.15
Exchange Agent 2.8
Exchange Fund 2.8
Extended Period 3.15
Indemnified Parties 3.14
Initial Termination Date 9.1
Exchange Ratio 2.6
Other Offer 3.8
Other Transaction 3.8
Retirement Account Plan 3.15
SERP 3.15
Special Date 3.8
Special Event 3.8
Special Fee 3.8
Surviving Corporation 2.1
-10
Wisconsin Energy Directors' Plan 3.15
ARTICLE II
THE MERGER
2.1 THE MERGER. This Agreement provides for the merger of
Acquisition with and into ESELCO, whereby each outstanding share of
ESELCO Common Stock will be converted into shares of Wisconsin Energy
Common Stock as described in this Agreement. As of the Effective Time
of Merger, Acquisition will be merged with and into ESELCO, which
shall be the surviving corporation in the Merger (the "Surviving
Corporation") and shall continue to be governed by the Laws of the
State of Michigan, and the separate existence of Acquisition shall
thereupon cease. The Merger shall be pursuant to the provisions of,
and shall be with the effects provided in, the Michigan Business
Corporation Act.
2.2 EFFECTIVE TIME OF MERGER. The consummation of the
Merger shall be effected as promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII and
Article VIII of this Agreement and Acquisition and ESELCO will cause
the Certificate of Merger and the Plan of Merger to be executed,
delivered and filed with the MDCI. The Merger shall become effective
at: (a) if the Closing occurs on or prior to December 30, 1997,
12:01 A.M. on January 1, 1998; or (b) if the Closing occurs after
December 30, 1997, the date and time of the filing of the Certificate
of Merger and the Plan of Merger with the MDCI. The date and time on
which the Merger shall become effective is referred to in this
Agreement as the "Effective Time of Merger".
2.3 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION.
The Articles of Incorporation of ESELCO as in effect immediately prior
to the Effective Time of Merger shall be the Articles of Incorporation
of the Surviving Corporation until amended in accordance with Law.
2.4 BYLAWS OF SURVIVING CORPORATION. The Bylaws of ESELCO
as in effect immediately prior to the Effective Time of Merger shall
be the Bylaws of the Surviving Corporation until amended in accordance
with Law.
-11-
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The
duly qualified and acting directors and officers of Acquisition
immediately prior to the Effective Time of Merger shall be the
directors and officers of the Surviving Corporation, to hold office as
provided in the Bylaws of the Surviving Corporation.
2.6 CONVERSION OF ESELCO COMMON STOCK.
(a) DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Average Wisconsin Energy Price" shall mean
the average of the closing sale price per share of Wisconsin Energy
Common Stock as reported on the New York Stock Exchange - Composite
Transactions on each of the ten (10) consecutive trading days ending
with the trading day immediately preceding the Closing Date.
(ii) "Exchange Ratio" shall mean that number
(carried to the fourth decimal place) obtained by dividing: (A)
$44.50; by (B) the Average Wisconsin Energy Price.
(b) CONVERSION. At the Effective Time of Merger, and
without any action on the part of the holders thereof:
(i) Each share of ESELCO Common Stock issued and
outstanding at the Effective Time of Merger shall be converted into
that number of shares of Wisconsin Energy Common Stock as is equal to
the Exchange Ratio on the terms and conditions set forth in this
Agreement; subject to the provisions of Section 2.8(e) of this
Agreement concerning cash being paid for fractional shares.
(ii) Any shares of capital stock of ESELCO that
are owned by any of the ESELCO Companies at the Effective Time of
Merger shall be cancelled and retired and cease to exist and no
Wisconsin Energy Common Stock or other consideration shall be issued
or delivered in exchange therefor.
2.7 CONVERSION OF ACQUISITION COMMON STOCK. At the Effective Time
of Merger, and without any action on the part of the holders thereof, each
share of common stock of Acquisition
-12-
issued and outstanding at the Effective Time of Merger shall be converted into
one (1) share of ESELCO Common Stock.
2.8 EXCHANGE OF ESELCO CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time of Merger,
Wisconsin Energy shall act as the exchange agent for, or shall deposit, or
shall cause to be deposited, with a bank or trust company designated by
Wisconsin Energy (in either case, the "Exchange Agent"), for the benefit of
the holders of shares of ESELCO Common Stock, for exchange in accordance with
this Article II of this Agreement through the Exchange Agent, certificates
representing the shares of Wisconsin Energy Common Stock (such certificates
for shares of Wisconsin Energy Common Stock, together with any dividends or
distributions with respect thereto and together with any cash for fractional
share interests made pursuant to Section 2.8(e) of this Agreement, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.6 of this Agreement in exchange for outstanding shares of ESELCO Common
Stock.
(b) EXCHANGE PROCEDURES.
(i) As soon as reasonably practicable after the Effective
Time of Merger, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time of
Merger represented outstanding shares of ESELCO Common Stock (the "ESELCO
Certificates"): (A) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the ESELCO
Certificates shall pass, only upon delivery of the ESELCO Certificates to the
Exchange Agent and which shall be in such form and have such other provisions
as Wisconsin Energy may reasonably specify; and (B) instructions to effect
the surrender of the ESELCO Certificates in exchange for certificates
representing shares of Wisconsin Energy Common Stock.
(ii) Upon surrender of an ESELCO Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and with such other documents as the Exchange Agent may
reasonably require, the holder of such ESELCO Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of
whole shares of Wisconsin Energy Common Stock to which such holder is
entitled in respect of such ESELCO Certificate pursuant to the provisions
-13-
of this Article II of this Agreement plus any cash in lieu of any fractional
share interest in accordance with Section 2.8(e) of this Agreement, and the
ESELCO Certificate so surrendered shall forthwith be cancelled; provided,
however, that fractional share interests of any one holder shall be
aggregated to maximize the number of whole shares of Wisconsin Energy Common
Stock to be issued and minimize the fractional interests to be paid in cash
as provided in Section 2.8(e) of this Agreement.
(iii) In the event of a transfer of ownership of shares of
ESELCO Common Stock which is not registered in the transfer records of
ESELCO, a certificate representing the proper number of shares of Wisconsin
Energy Common Stock may be issued to the transferee if the ESELCO Certificate
which represented such shares of ESELCO Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid.
(iv) Until surrendered as contemplated by this
Section 2.8 of this Agreement, each ESELCO Certificate shall be deemed
at all times after the Effective Time of Merger to represent only the
right to receive upon surrender a certificate representing shares of
Wisconsin Energy Common Stock and cash in lieu of any fractional share
interest as contemplated by Section 2.8(e) of this Agreement.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
No dividends or other distributions declared or made after the
Effective Time of Merger with respect to Wisconsin Energy Common Stock
with a record date after the Effective Time of Merger shall be paid to
the holder of any unsurrendered ESELCO Certificate with respect to the
shares of Wisconsin Energy Common Stock represented thereby, and no
cash payment in lieu of a fractional share shall be paid to any such
holder pursuant to Section 2.8(e) of this Agreement, until the holder
of such ESELCO Certificate shall surrender such ESELCO Certificate.
Subject to the effect of any applicable Law, following surrender of
any such ESELCO Certificate, there shall be paid to the holder of the
certificate representing whole shares of Wisconsin Energy Common Stock
issued in exchange therefor, without interest: (i) promptly, the
amount of any cash payable with respect to a fractional share interest
to which such holder is entitled pursuant to Section 2.8(e) of this
Agreement and the amount of dividends or other distributions with a
record date after the
-14-
Effective Time of Merger theretofore paid with respect to such whole shares
of Wisconsin Energy Common Stock; and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time of Merger but prior to surrender and a payment date occurring
after surrender payable with respect to such whole shares of Wisconsin Energy
Common Stock.
(d) NO FURTHER RIGHTS IN ESELCO COMMON STOCK. All
shares of Wisconsin Energy Common Stock issued upon conversion of the
ESELCO Common Stock in accordance with the terms of this Agreement
(and any cash paid pursuant to Section 2.8(e) of this Agreement) shall
be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the ESELCO Common Stock.
(e) NO FRACTIONAL SHARES. No fractional shares of
Wisconsin Energy Common Stock shall be issued in the Merger. All
fractional share interests of a holder of more than one ESELCO
Certificate at the Effective Time of Merger shall be aggregated. If a
fractional share interest results after such aggregation, each holder
of a fractional share interest shall be paid an amount in cash equal
to the product obtained by multiplying such fractional share interest
by the Average Wisconsin Energy Price. As soon as practicable after
the determination of the amount of cash, if any, to be paid to holders
of fractional share interests, the Exchange Agent shall notify
Wisconsin Energy and Wisconsin Energy shall make available such
amounts to such holders subject to and in accordance with the terms of
Section 2.8(c) of this Agreement.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the ESELCO Stockholders
as of a date which is six months after the Effective Time of Merger
shall be delivered to Wisconsin Energy, upon demand, and any ESELCO
Stockholders who have not theretofore complied with this Article II of
this Agreement shall thereafter look only to Wisconsin Energy for
payment of their claim for shares of Wisconsin Energy Common Stock,
any cash in lieu of fractional share interests and any dividends or
distributions with respect to Wisconsin Energy Common Stock.
(g) NO LIABILITY. Neither the Exchange Agent nor any
party to this Agreement shall be liable to any ESELCO Stockholder for
any shares of ESELCO Common Stock or Wisconsin
-15-
Energy Common Stock (or dividends or distributions with respect thereto) or
cash delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
(h) WITHHOLDING RIGHTS. Wisconsin Energy shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any ESELCO Stockholder such
amounts as Wisconsin Energy is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision
of state, local or foreign tax Law. To the extent that amounts are so
withheld by Wisconsin Energy, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the ESELCO
Stockholder in respect of which such deduction and withholding was
made by Wisconsin Energy.
(i) BOOK ENTRY. Notwithstanding any other provision
of this Agreement, the letter of transmittal referred to in Section
2.8(b) of this Agreement may, at the option of Wisconsin Energy,
provide for the ability of a holder of one or more ESELCO Certificates
to elect that Wisconsin Energy Common Stock to be received in exchange
for the ESELCO Common Stock formerly represented by such surrendered
ESELCO Certificates be issued in uncertificated form or to elect that
such Wisconsin Energy Common Stock be credited to an account
established under the dividend reinvestment and stock purchase plan of
Wisconsin Energy.
2.9 STOCK TRANSFER BOOKS. At the Effective Time of Merger,
the stock transfer books of ESELCO shall be closed and there shall be
no further registration of transfers of shares of ESELCO Common Stock
thereafter on the records of ESELCO. From and after the Effective
Time of Merger, the holders of ESELCO Certificates outstanding
immediately prior to the Effective Time of Merger shall cease to have
any rights with respect to such shares of ESELCO Common Stock except
as otherwise provided in this Agreement or by Law.
2.10 REORGANIZATION; POOLING. The parties intend that this
Agreement be a plan of reorganization within the meaning of Section
368(a) of the Code and that the Merger be a tax free reorganization
under Section 368(a) of the Code and that the Merger qualify for
pooling of interests accounting treatment.
-16-
2.11 DISSENTERS' RIGHTS. The parties are proceeding on the basis
that the ESELCO Stockholders shall have no dissenters' or appraisal rights in
connection with the Merger and the transactions described in this Agreement
based on Section 450.1762(2)(b) of the Michigan Business Corporation Act.
ARTICLE III
OTHER AGREEMENTS
3.1 PROXY STATEMENT AND REGISTRATION STATEMENT. Wisconsin Energy
and ESELCO will prepare and file with the SEC the Registration Statement and
the Proxy Statement as soon as reasonably practicable after the date of this
Agreement. Wisconsin Energy and ESELCO shall use reasonable efforts to cause
the Registration Statement to be declared effective under the Securities Act
as promptly as practicable after such filing. Wisconsin Energy and ESELCO
shall also take such action as may be reasonably required to cause the shares
of Wisconsin Energy Common Stock issuable pursuant to the Merger to be
registered or to obtain an exemption from registration under applicable state
"blue sky" or securities Laws; provided, however, that Wisconsin Energy shall
not be required to qualify as a foreign corporation or to file any general
consent to service of process under the Laws of any jurisdiction or to comply
with any other requirements deemed by Wisconsin Energy to be unduly
burdensome. Each party to this Agreement will furnish to the other parties
all information concerning itself as each such other party or its counsel may
reasonably request and which is required or customary for inclusion in the
Proxy Statement and the Registration Statement.
3.2 APPROVAL OF ESELCO STOCKHOLDERS. ESELCO shall as soon as
reasonably practicable: (a) take all steps necessary duly to call, give
notice of, convene and hold the ESELCO Special Meeting; (b) distribute the
Proxy Statement, which shall also constitute the prospectus of Wisconsin
Energy included in the Registration Statement, to the ESELCO Stockholders in
accordance with applicable Federal and state Law and with its Articles of
Incorporation and Bylaws; (c) subject to the provisions of Section 3.8(d) of
this Agreement, recommend to the ESELCO Stockholders the approval of this
Agreement and the transactions contemplated by this Agreement and such other
matters as may be submitted to the ESELCO Stockholders in connection with this
-17-
Agreement; and (d) cooperate and consult with Wisconsin Energy with respect
to each of the foregoing matters.
3.3 ACCESS.
(a) ACCESS. Upon reasonable notice, ESELCO shall, and
shall cause Edison Sault, ESEG and NTS to, afford to the agents,
accountants, attorneys and representatives of Wisconsin Energy
reasonable access to all of its books, records, financial information,
facilities, key personnel and other documents and materials; provided
that such access shall be upon reasonable notice and during normal
business hours
of the ESELCO Companies.
(b) CONFIDENTIALITY AGREEMENT. ESELCO and Wisconsin
Energy agree that the provisions of the Confidentiality Agreement
shall remain in full force and effect; provided that: (i) the phrase
"three years from the date hereof" in the second full paragraph on
page 2 of the Confidentiality Agreement is amended to read as follows:
"beginning on January 16, 1997 and ending on that date which is the
later of January 16, 1999 or that date which is one year after the
termination of the Amended and Restated Agreement and Plan of
Reorganization between ESELCO and Wisconsin Energy"; and (ii) at the
Effective Time of Merger, the Confidentiality Agreement shall be
deemed to have terminated without further action by the parties.
3.4 DISCLOSURE SCHEDULE.
(a) DISCLOSURE SCHEDULE. On May 13, 1997, ESELCO
delivered to Wisconsin Energy the Disclosure Schedule, which was
accompanied by a certificate signed by the President and Chief
Executive Officer and the Secretary of ESELCO stating the Disclosure
Schedule was delivered pursuant to this Agreement and was the
Disclosure Schedule referred to in this Agreement. The Disclosure
Schedule is deemed to constitute an integral part of this Agreement
and to modify the representations, warranties, covenants or agreements
of ESELCO contained in this Agreement.
(b) UPDATES. Prior to the Closing Date, ESELCO shall
update the Disclosure Schedule on a monthly basis by written notice to
Wisconsin Energy to reflect any matters which have occurred from and
after the date of this Agreement which, if existing on the date of
this Agreement, would have been required to be described in the
Disclosure Schedule. If requested by
-18-
Wisconsin Energy within 14 calendar days after receipt of an update to the
Disclosure Schedule, ESELCO shall meet and discuss with Wisconsin Energy any
change in the Disclosure Schedule made by ESELCO which, in the reasonable
judgment of Wisconsin Energy, has or may have an ESELCO Material Adverse
Effect or which may be materially adverse in any manner to Wisconsin Energy
(a "Disclosure Schedule Change"). If the parties cannot resolve any
differences regarding a Disclosure Schedule Change within a reasonable period
of time (not to exceed 30 calendar days after receipt of an update to the
Disclosure Schedule) Wisconsin Energy may terminate this Agreement. If
Wisconsin Energy does not terminate this Agreement pursuant to this Section
3.4(b) of this Agreement, the relevant Disclosure Schedule Changes shall be
deemed to be accepted by Wisconsin Energy and Wisconsin Energy shall no
longer have any right to terminate this Agreement based on such Disclosure
Schedule Changes except to the extent otherwise provided in Section 7.5 of
this Agreement with respect to such Disclosure Schedule Change.
3.5 DUTIES CONCERNING REPRESENTATIONS. Each party to this
Agreement shall: (a) to the extent within its control, use reasonable
efforts to cause all of its representations and warranties contained
in this Agreement to be true and correct in all respects at the
Effective Time of Merger with the same force and effect as if such
representations and warranties had been made at and as of the
Effective Time of Merger; and (b) use reasonable efforts to obtain any
third party consents or approvals required by this Agreement and to
cause all of the conditions precedent set forth in Articles VII and
VIII of this Agreement to be satisfied.
-19-
3.6 DELIVERIES OF INFORMATION; CONSULTATION. From time to
time prior to the Effective Time of Merger:
(a) DELIVERIES BY ESELCO. ESELCO shall furnish
promptly to Wisconsin Energy: (i) a copy of each report, schedule and
other document filed by it or received by it pursuant to the
requirements of federal or state securities Laws or any other
applicable Laws promptly after such documents are available; (ii) the
monthly consolidated and consolidating financial statements of the
ESELCO Companies (as prepared by ESELCO in accordance with its normal
accounting procedures) promptly after such financial statements are
available; (iii) a summary of any action taken by the Board of
Directors, or any committee thereof, of any of the ESELCO Companies;
and (iv) all other information concerning the business, properties and
personnel of any of the ESELCO Companies as Wisconsin Energy may
reasonably request.
(b) DELIVERIES BY WISCONSIN ENERGY. Wisconsin Energy
shall promptly furnish to ESELCO a copy of each report, schedule and
other document filed by Wisconsin Energy with the SEC pursuant to the
requirements of federal securities Laws promptly after such documents
are available.
(c) CONSULTATION. ESELCO shall, and shall cause
Edison Sault, ESEG and NTS to, confer and consult with representatives
of Wisconsin Energy and its Subsidiaries on a regular and frequent
basis to report on operational matters, environmental remediations and
other environmental matters and the general status of ongoing business
operations of the ESELCO Companies.
(d) REGULATORY MATTERS. ESELCO shall, and shall cause
Edison Sault, ESEG and NTS to, discuss with Wisconsin Energy any
changes in the rates, charges, standards of service or accounting of
any of the ESELCO Companies from those in effect on the date of this
Agreement and consult with Wisconsin Energy prior to making any filing
(or amendment thereto), or effecting any agreement, commitment,
arrangement or consent, whether written or oral, formal or informal,
with respect thereto.
(e) FRANCHISES, ETC. ESELCO shall, and shall cause Edison
Sault, ESEG and NTS to, use all reasonable efforts to maintain in effect and
renew all existing franchises,
20
certificates of convenience and necessity and other permits, as the case may
be, pursuant to which any of the ESELCO Companies operates in its service
territories. ESELCO shall notify Wisconsin Energy promptly in the event that
it becomes aware of: (i) any problem, complaint or proceeding which could
result in the termination or non-renewal of any such franchise, certificate
of convenience and necessity or permit; or (ii) any significant complaint to
the MPSC or any of the ESELCO Companies by a customer of any of the ESELCO
Companies or by any other Person concerning the rates, xxxxxxxx, service or
any other matter relating to the business of any of the ESELCO Companies.
(f) LITIGATION. Each party to this Agreement shall
provide prompt notice to the other parties of any litigation,
arbitration, proceeding, governmental investigation, citation or
action of any kind which may be commenced, threatened or proposed by
any Person concerning the legality, validity or propriety of the
transactions contemplated by this Agreement. If any such litigation
is commenced against any party to this Agreement, the parties shall
cooperate in all respects in connection with such litigation and
Wisconsin Energy shall have the right to assume the defense thereof at
its cost and expense and, if Wisconsin Energy does assume such
defense, it shall confer regularly with ESELCO and shall not settle
any such litigation without the prior consent of ESELCO, which consent
shall not be unreasonably withheld.
(g) DELIVERY OF ESELCO STOCKHOLDER LIST. ESELCO
shall: (a) deliver to Wisconsin Energy a list of all outstanding
options to acquire any shares of ESELCO Common Stock, the names of the
Persons holding such options and the terms and conditions of each such
option; (b) deliver to Wisconsin Energy a list of all outstanding
restricted shares of ESELCO Common Stock, the names of the Persons
holding such shares and the terms and conditions of each such
arrangement; and (c) after the approval of this Agreement by the
ESELCO Stockholders at the ESELCO Special Meeting, arrange to have its
transfer agent deliver to Wisconsin Energy or its designee a true and
complete list setting forth the names and addresses of the ESELCO
Stockholders, their holdings of stock as of the latest practicable
date, and such other shareholder information as Wisconsin Energy may
request.
3.7 AFFILIATES; ACCOUNTING AND TAX TREATMENT. ESELCO shall
advise the Affiliates of the resale restrictions imposed by applicable
securities Laws and required to cause the Merger to
-21-
qualify for pooling-of-interests accounting treatment, and shall obtain from
each Affiliate an executed Affiliate Letter. ESELCO shall obtain an executed
Affiliate Letter from any Person who becomes an Affiliate of ESELCO after the
date of this Agreement and on or prior to the Effective Time of Merger.
ESELCO and Wisconsin Energy will each use its respective reasonable best
efforts to cause the Merger to qualify for pooling-of-interests accounting
treatment and as a reorganization under Section 368(a) of the Code.
3.8 OTHER TRANSACTIONS.
(a) DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Other Offer" shall mean any inquiry,
proposal or offer relating in any manner to an Other Transaction.
(ii) "Other Transaction" shall mean any of the following
on or prior to the Special Date, other than the Merger as contemplated by
this Agreement: (A) a merger, consolidation, share exchange, exchange of
securities, reorganization, business combination or other similar transaction
involving any of the ESELCO Companies; (B) a sale, transfer or other
disposition of all or a significant portion of the assets of any of the
ESELCO Companies in a single transaction or series of related transactions;
(C) a sale of, or tender offer or exchange offer for, or acquisition by any
Person or group of beneficial owners of, a substantial interest in the
outstanding capital stock of any of the ESELCO Companies in a single
transaction or series of related transactions; or (D) a public announcement
of a proposal, plan, intention or agreement to do any of the foregoing.
(iii) "Special Date" shall mean that date which is the
later of: (A) January 16, 1999; or (B) six (6) months after the date of
termination of this Agreement.
(iv) "Special Event" shall mean any of the following to
occur on or prior to the Special Date: (A) a Person unrelated to Wisconsin
Energy has consummated, or has publicly announced or proposed (and
subsequently consummates after the Special Date), an Other Transaction; or
(B) any of the ESELCO Companies has entered into an agreement with respect to
an Other
-22-
Transaction; or (C) ESELCO shall have terminated this Agreement for the
purpose of pursuing an Other Offer or Other Transaction.
(b) TERMINATION OF DISCUSSIONS. ESELCO shall
immediately cease and cause to be terminated all existing discussions
and negotiations, if any, with any parties conducted prior to the date
of this Agreement with respect to any Other Transaction, except that
ESELCO may notify such other parties that the discussions and
negotiations are terminated.
(c) NON SOLICITATION. ESELCO shall not, and shall not
permit its Subsidiaries or officers, directors, employees, agents or
other representatives of any of the ESELCO Companies (including,
without limitation, any investment banker, attorney or accountant
retained or engaged by any of the ESELCO Companies) to, solicit,
initiate, facilitate, encourage, negotiate with respect to, discuss or
agree to, any Other Offer or any Other Transaction, except to the
extent required by the fiduciary duties of ESELCO's officers and Board
of Directors under applicable Law if so advised by a written opinion
of outside counsel. ESELCO shall notify Wisconsin Energy orally and
in writing within twenty-four (24) hours following receipt by the
Chairman of the Board or President of ESELCO of any Other Offer,
including the terms and conditions of any such Other Offer and the
Person making such Other Offer, except to the extent that ESELCO may
be prohibited from so doing by a Contract entered into prior to March
24, 1997. ESELCO shall give Wisconsin Energy five (5) calendar days
prior notice and an opportunity to negotiate with ESELCO before
entering into, executing or agreeing to any Other Offer or Other
Transaction. Nothing in this Section 3.8 of this Agreement shall
prohibit ESELCO from taking and disclosing to the ESELCO Stockholders
a position contemplated by Rule 14e-2(a) under the Exchange Act with
respect to an Other Transaction by means of a tender offer.
(d) TERMINATION. ESELCO may, by notice to Wisconsin
Energy at any time prior to the Effective Time of Merger, terminate
this Agreement if ESELCO enters into, executes or agrees to an Other
Offer or Other Transaction following a determination by the Board of
Directors of ESELCO on the written advice of counsel that such action
is required by its fiduciary duties under applicable Law and
compliance by ESELCO with the provisions of Section 3.8(c) of this
Agreement.
-23-
(e) SPECIAL FEE. In order to induce Wisconsin Energy
to enter into this Agreement and to compensate Wisconsin Energy for
the time and expenses incurred in connection with this Agreement and
the Merger and the losses suffered by Wisconsin Energy from foregone
opportunities, ESELCO shall pay a "Special Fee" equal to $2,000,000 to
Wisconsin Energy in immediately available funds within five (5)
business days after the occurrence of a Special Event.
(f) TERMINATION OF SECTION 3.8(E). There shall be no
Special Fee payable as a result of a Special Event which occurs after
this Agreement is terminated:
(i) by Wisconsin Energy and ESELCO pursuant to
Section 9.1(a) of this Agreement; or
(ii) by Wisconsin Energy pursuant to Section
9.1(b) of this Agreement based on a failure of either or both of the
conditions specified in Section 7.4 or 7.5 of this Agreement except if
such failure of condition results from any wilful or intentional acts
of any of the ESELCO Companies; or
(iii) by Wisconsin Energy pursuant to Section
9.1(f) of this Agreement.
3.9 LETTER OF ESELCO'S ACCOUNTANTS. ESELCO shall use its
reasonable best efforts to cause to be delivered to Wisconsin Energy a letter
of Xxxxxx Xxxxxxxx LLP, ESELCO's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Wisconsin Energy, in form and substance
reasonably satisfactory to Wisconsin Energy and customary in scope and
substance for cold comfort letters delivered by
-24-
independent public accountants in connection with registration statements
similar to the Registration Statement.
3.10 LETTER OF WISCONSIN ENERGY'S ACCOUNTANTS. Wisconsin
Energy shall use its reasonable best efforts to cause to be delivered
to ESELCO a letter of Price Waterhouse LLP, Wisconsin Energy's
independent auditors, dated a date within two business days before the
date on which the Registration Statement shall become effective and
addressed to ESELCO, in form and substance reasonably satisfactory to
ESELCO and customary in scope and substance for cold comfort letters
delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
3.11 LEGAL CONDITIONS TO MERGER. Each party to this
Agreement will: (a) take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with
respect to the Merger (including making all filings and requests in
connection with approvals of or filings with any governmental entity
as described in Sections 7.9 and 8.8 of this Agreement and furnishing
all information required in connection therewith); (b) promptly
cooperate with and furnish information to the other parties in
connection with any such requirements imposed upon any of them in
connection with the Merger; and (c) take all reasonable actions
necessary to obtain (and will cooperate with the other parties in
obtaining) any consent, authorization, order or approval of, or any
exemption by, any governmental entity or other public or private
Person, required to be obtained or made by the parties to this
Agreement in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
3.12 STOCK EXCHANGE LISTING. Wisconsin Energy shall use its
reasonable best efforts to cause the shares of Wisconsin Energy Common
Stock to be issued in the Merger to be approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
3.13 PUBLIC ANNOUNCEMENTS. Subject to each party's
disclosure obligations imposed by Law, ESELCO, Acquisition and
Wisconsin Energy 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
contemplated hereby and, except as may be required by Law, shall not
issue any public announcement or statement with respect thereto prior
to consultation with the other parties.
-25-
3.14 INDEMNIFICATION AND INSURANCE.
(a) INDEMNIFICATION. From and after the Effective
Time of Merger, Wisconsin Energy shall cause ESELCO (and successors to
ESELCO) to indemnify and hold harmless each present and former
employee, agent, director or officer of any of the ESELCO Companies
and the heirs, successors and assigns of such Persons (the
"Indemnified Parties") against any amounts incurred by such
Indemnified Parties, including without limitation, losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys
fees incurred in defense or otherwise), judgments and amounts paid in
settlement, in connection with any claim, action, suit, proceeding or
investigation arising out of or relating to the transactions described
in this Agreement and any which arise out of or relate to an
Indemnified Party having served as a committee member, director,
officer, employee or agent of any of the ESELCO Companies, or as a
trustee or fiduciary of any Employee Benefit Plans or otherwise on
behalf of any of the ESELCO Companies, whether asserted or commenced
prior to or after the Effective Time of Merger. Such indemnification
shall be in accordance with, and substantially equivalent to, the
indemnification provided from time to time by Subsidiaries of
Wisconsin Energy to employees, agents, directors and officer of
Subsidiaries of Wisconsin Energy.
(b) INSURANCE. For at least three (3) years from and
after the Effective Time of Merger, Wisconsin Energy shall maintain,
or shall cause to be maintained, in effect directors and officers
insurance covering those Persons covered by ESELCO's directors and
officers insurance as of the date of this Agreement. This directors
and officers insurance shall be not less in terms of coverage and
amount as the insurance that ESELCO has in effect covering officers
and directors on the date of this Agreement.
3.15 EMPLOYMENT MATTERS.
(a) EDISON SAULT MANAGEMENT PENSION PLAN. Within a
reasonable period of time after the Effective Time of Merger,
Wisconsin Energy shall cause the Pension Plan for Management Employees
of Edison Sault (the "Edison Sault Management Plan") to be merged into
the Wisconsin Electric Power Company Retirement Account Plan (the
"Retirement Account Plan") and the Retirement Account Plan to be
amended to provide that
-26-
employees of Edison Sault who were covered under the Edison Sault Management
Plan and who became covered under the Retirement Account Plan by reason of
such merger and who subsequently terminate on or prior to December 31, 2010
with a 100% fully vested interest shall be entitled to an accrued pension
benefit not less than what they would have received had the provisions of the
Edison Sault Management Plan as in existence as of the Effective Time of
Merger continued to apply to them (except that Wisconsin Energy reserves the
right to provide all or part of such accrued pensions benefits by means of a
non-qualified pension plan to the extent necessary to maintain, in the
reasonable judgment of Wisconsin Energy, the tax qualified status of the
Retirement Account Plan).
(b) EDISON SAULT EMPLOYEE INCENTIVE INVESTMENT AND
STOCK OWNERSHIP PLAN. Within a reasonable period of time after the
Effective Time of Merger, Wisconsin Energy shall cause the Employee
Incentive Investment and Stock Ownership Plan of Edison Sault to be
merged into the Wisconsin Electric Power Company Employees Savings
Plan and shall extend such Savings Plan to the employees of the ESELCO
Companies.
(c) SPECIAL EARLY RETIREMENT WINDOW PROGRAM. Prior to
or after the Effective Time of Merger, but prior to the merger of any
defined benefit pension plan of Edison Sault which is used in
connection with a special voluntary early window program, Edison Sault
may proceed with a special voluntary early retirement window program
in accordance with the program described in the Disclosure Schedule.
(d) SEVERANCE AGREEMENTS. After the Effective Time of
Merger, Wisconsin Energy shall cause Edison Sault to honor all
obligations which may be incurred by Edison Sault under the nine
Executive Severance Agreements identified on the Disclosure Schedule,
subject to the terms thereof, which would cause such obligations to
expire regarding any individual who elected a special early retirement
benefit under the program described in Section 3.15(c) of this
Agreement.
(e) COMPANY CARS. After the Effective Time of Merger,
Wisconsin Energy will cause the ESELCO Companies to continue a company car
policy with respect to those employees who are determined from time-to-time
to have an operational need therefor and regarding the other individuals who
are currently provided with company cars as of the Effective Time of Merger,
to
-27-
allow them to either continue to use the same until the end of the useful
life thereof, with an option at the end of such useful life to buy the same
at the lower of book or market value, or to elect to discontinue use of the
same and receive such increase in compensation as is determined to be
appropriate in the sole discretion of the employer.
(f) RETIREE HEALTH CARE PLAN. After the Effective Time of
Merger, Wisconsin Energy will cause the retiree health care program then in
effect at the ESELCO Companies (the "ESELCO Retiree Health Plan") to be
continued, subject to and in accordance with its terms (including any
reserved right to amend or terminate the same), with respect to individuals
who were already retired at such time and with respect to those who retire or
otherwise terminate from the service of the ESELCO Companies in such manner
as to entitle them to benefit from such program, until at least one year from
the Effective Time of Merger (the "Changeover Date"), with such individuals
(both those already retired and those who subsequently retire) to pay
forty-five percent (45%) of the cost thereof, except for the classes of
individuals identified in the Disclosure Schedule who will only be obligated
to pay forty percent (40%). From the Changeover Date until December 31, 2004
(the "Extended Period"), Wisconsin Energy will cause the ESELCO Companies to
continue the same program of benefits and, at least for purposes of measuring
retiree contributions, at the same total premium costs, with both such
benefits and costs to be subject to change from time to time as would occur
pursuant to the underlying health insurance contracts in effect immediately
prior to the Changeover Date (whether or not those insurance contracts are
actually continued in force), and retiree contributions shall be fifty
percent (50%) of such costs. During the Extended Period, Wisconsin Energy
may in its discretion cause the ESELCO Companies to provide such benefits
either by a continuation of the health insurance contracts in effect
immediately prior to the Changeover Date under the ESELCO Retiree Health
Plan, use of a self-insured arrangement, or otherwise.
(g) OTHER BENEFITS. Within a reasonable period of time after
the Effective Time of Merger and subject to the collective bargaining
obligations of Edison Sault, Wisconsin Energy shall cause other benefit plans
and programs substantially similar to those in effect at Wisconsin Electric
Power Company for employees generally (including severance benefits) to be
extended to employees of the ESELCO Companies and shall extend
-28-
past service credit for purposes of eligibility to participate, vesting and
benefit accruals under such benefit plans and programs for service with the
ESELCO Companies before the Effective Time of Merger, provided that such
crediting of service shall not operate to duplicate any benefit or the
funding of any benefit, and provided further that any vacation entitlements
in existence at the Effective Time of Merger under any policy of the ESELCO
Companies with respect to officers shall not be decreased after the Effective
Time of Merger.
(h) RELOCATION EXPENSES FOR TRANSFERRED MANAGEMENT EMPLOYEES.
Wisconsin Energy will cause the ESELCO Companies to establish a special
relocation expense reimbursement plan for such of the management employees of
Edison Sault as are requested to relocate as a result of the transactions
described in this Agreement substantially similar to such program as may then
be in effect at Wisconsin Electric Power Company.
(i) SERP. Edison Sault shall take all necessary actions to
terminate the Supplemental Executive Retirement Plan of Edison Sault Electric
Company (the "SERP"), as of the Effective Time of Merger and shall continue
to remain obligated to pay benefits in the amount earned under the SERP as of
the termination date to those participants who would be eligible to receive
benefits if their employment had been then terminated. Edison Sault shall
obtain the consent of each other current participant who may have earned
benefits under the SERP but who would not be eligible to receive such
benefits if his employment had terminated on the date of termination of the
SERP to receipt of an immediate single lump sum distribution of reasonably
equivalent actuarial value in lieu of and in complete satisfaction of any
other obligation to such individual under the SERP (with such lump sum to be
increased to take into account the tax impact thereof, assuming the maximum
combined federal, Michigan and employee Medicare tax rates in effect as of
the Effective Time of Merger, net of the federal income tax benefit of the
state tax, the intent of such increase being to leave each such individual
with an amount which, after payment of such taxes under the assumption above,
would be equal to such single lump sum distribution.
(j) DIRECTOR'S RETIREMENT PLAN. ESELCO shall take all
necessary actions to terminate the ESELCO, Inc. Director's Retirement Plan
(the "ESELCO Director Plan") as of the Effective Time of Merger. After the
Effective Time of Merger,
-29-
Wisconsin Energy shall cause ESELCO to continue to honor all obligations
under the ESELCO Director Plan as in effect at such termination.
(k) DIRECTOR'S FEE DEFERRAL PLANS. (i) With respect
to the Edison Sault Electric Company Director's Fee Deferral Plan
effective as of October 1, 1989 (the "1989 Fee Deferral Plan"), ESELCO
shall cause Edison Sault to take all necessary actions to discontinue
recognizing further fee deferrals and to amend such Plan as of the
Effective Time of Merger as follows:
(A) to provide that all future earnings on the deferred fee
account balances will be identical to the interest rates or
other methods allowed to participants under the Wisconsin
Energy Directors' Deferred Compensation Plan (the "Wisconsin
Energy Directors' Plan") from time to time;
(B) to eliminate Section B(17) of Article I and Section B(3) of
Article III; and
(C) to make the methods of payment identical to the methods
allowed to participants and beneficiaries under the
Wisconsin Energy Directors' Plan.
ESELCO shall also cause Edison Sault to take all necessary actions,
simultaneously with the foregoing amendments, to terminate the 1989
Fee Deferral Plan as of the Effective Time of Merger. After the
Effective Time of Merger, Wisconsin Energy shall cause Edison Sault to
continue to honor all obligations under the 1989 Fee Deferral Plan, as
so amended and as in effect at such termination.
(ii) With respect to the Edison Sault Electric Company
ESELCO Director's Fee Deferral Plan as of January 1, 1986 (the "1986
Fee Deferral Plan"), ESELCO shall cause Edison Sault to take all
necessary actions to discontinue recognizing further fee deferrals and
to amend such Plan as of the Effective Time of Merger to eliminate
Section B(17) of Article I and Section B(3) of Article III. ESELCO
shall also cause Edison Sault to take all necessary actions,
simultaneously with the foregoing amendments, to terminate the 1986
Fee Deferral Plan, as of the Effective Time of Merger. After the
Effective Time of Merger, Wisconsin Energy shall cause Edison Sault to
continue to honor all obligations
-30-
under the 1986 Fee Deferral Plan, as so amended and as in effect at such
termination.
(l) LABOR AGREEMENTS. Prior to and after the
Effective Time of Merger, Edison Sault shall, and after the Effective
Time of Merger, Wisconsin Energy shall cause Edison Sault to, continue
to honor all collective bargaining agreements to which it is a party,
subject to the terms thereof, it being acknowledged that the current
collective bargaining agreements in effect as of the date of execution
of this Agreement expire on October 21, 1998.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ESELCO
ESELCO hereby represents and warrants to Wisconsin Energy
and Acquisition that, except as set forth in the Disclosure Schedule:
4.1 ORGANIZATION; BUSINESS.
(a) ORGANIZATION. Each of the ESELCO Companies is a
corporation duly and validly organized and existing and in good
standing under the Laws of the State of Michigan. Each of the ESELCO
Companies is qualified to do business as a foreign corporation and is
in good standing in all other jurisdictions where the ownership or
leasing of property or the conduct of its business requires
qualification as a foreign corporation by it, except where the failure
to so qualify does not and will not have an ESELCO Material Adverse
Effect.
(b) CORPORATE POWER AND AUTHORITY. Each of the ESELCO
Companies has full corporate power and authority and all franchises,
permits, licenses, approvals, authorizations, registrations,
certificates of convenience and necessity, grants and orders necessary
to carry on its business as it is now conducted and to own, lease and
operate its assets and properties.
(c) REGULATION. ESELCO is an exempt holding company
under Section 3(a)(1) of PUHCA. Edison Sault is regulated as a public
utility in the State of Michigan and is not
-31-
subject to regulation in any other state. ESELCO, ESEG and NTS are not
regulated as public utilities or subject to such regulation by any state.
(d) BUSINESS OF ESELCO. The only business conducted
by ESELCO is the ownership of the capital stock of, and providing
services to and guarantees for, Edison Sault, ESEG and NTS.
(e) BUSINESS OF EDISON SAULT. The only business
conducted by Edison Sault is the generation, distribution,
transmission and sale of electricity, and service incidental thereto,
to approximately 22,000 residential, commercial and industrial
customers in the Eastern portion of the Upper Peninsula of the State
of Michigan. Edison Sault conducts its business within its service
areas pursuant to rate schedules and applicable rules and regulations
of Edison Sault duly authorized and approved and filed with the MPSC.
(f) ASSETS OF EDISON SAULT. Edison Sault owns or has
the right to use all property, real or personal, tangible or
intangible, which it uses in the operation of its business and to
permit it to render electric utility services within the service areas
in which it carries on its business as it is now being conducted.
(g) BUSINESS OF ESEG. ESEG is currently inactive but,
upon appropriate FERC approval, the only business conducted by ESEG
will be the ownership of submarine cables under the Straits of
Mackinac which are leased to Edison Sault.
(h) BUSINESS OF NTS. The only businesses conducted by
NTS are the provision of tree removal and tree trimming services and
the ownership of a radio tower near Engadine, Michigan.
(i) ARTICLES OF INCORPORATION AND BYLAWS. Copies of
the Articles of Incorporation and Bylaws of each of the ESELCO
Companies, as amended, certified by the Secretary of ESELCO as of the
date of this Agreement, are being delivered by ESELCO to Wisconsin
Energy contemporaneously with the execution and delivery of this
Agreement and such copies are complete and correct copies of such
documents in effect as of the date of this Agreement.
-32-
4.2 CAPITALIZATION.
(a) CAPITALIZATION OF ESELCO. The entire authorized
capital stock of ESELCO consists of: (i) 3,000,000 shares of Common
Stock (which will be increased to 9,840,000 shares under an amendment
to ESELCO's Articles of Incorporation to be voted upon at ESELCO's
1997 Annual Meeting of Stockholders), $0.01 par value, of which
1,593,180 shares will be issued and outstanding following payment of
ESELCO's 3% stock dividend which was declared on March 13, 1997 and is
payable on May 15, 1997, and none of such shares are held by any of
the ESELCO Companies; and (ii) 160,000 shares of Preferred Stock,
$0.01 par value, none of which are issued and outstanding.
(b) CAPITALIZATION OF EDISON SAULT. The entire
authorized capital stock of Edison Sault consists of: (i) 3,000,000
shares of Common Stock, $1.00 par value, of which 673,929 shares are
issued and outstanding, all of which are owned by ESELCO; and (ii)
160,000 shares of Preferred Stock, $25.00 par value, none of which are
issued and outstanding.
(c) CAPITALIZATION OF ESEG. The entire authorized
capital stock of ESEG consists of 100 shares of Common Stock, $0.01
par value, of which 100 shares are issued and outstanding, all of
which are owned by ESELCO.
(d) CAPITALIZATION OF NTS. The entire authorized
capital stock of NTS consists of 100 shares of Common Stock, $0.01 par
value, of which 100 shares are issued and outstanding, all of which
are owned by ESELCO.
(e) OUTSTANDING CAPITAL STOCK. All of the outstanding
capital stock of each of the ESELCO Companies is duly authorized,
validly issued, fully paid and nonassessable and free of preemptive
rights. There are no options, warrants, conversion rights or other
rights to subscribe for or purchase, or other contracts with respect
to, any capital stock of any of the ESELCO Companies.
(f) ESELCO DRIP. The ESELCO DRIP has been suspended
in accordance with its terms by ESELCO effective as of May 15, 1997
and will be terminated at the Effective Time of Merger. All shares of
ESELCO Common Stock held in the ESELCO DRIP have been or will be
properly allocated to the accounts of Persons who were participants in
the ESELCO DRIP, are recorded in
-33-
book-entry form and, subject to earlier withdrawal in accordance with the
terms of the ESELCO DRIP, will be held in the ESELCO DRIP until the Effective
Time of Merger. All shares of ESELCO Common Stock held in the ESELCO DRIP at
the Effective Time of Merger shall be converted into shares of Wisconsin
Energy Common Stock as provided in Section 2.6 of this Agreement. If
Wisconsin Energy provides such an election pursuant to Section 2.8(i) of this
Agreement, participants in the ESELCO DRIP who elect to have such Wisconsin
Energy Common Stock credited to accounts established for them under Wisconsin
Energy's dividend reinvestment and stock purchase Plan shall have their
ESELCO DRIP shares converted into the number of whole shares and any
fractional share of Wisconsin Energy Common Stock resulting from the
application of the Exchange Ratio, instead of having any such fractional
share paid in cash as provided in Section 2.8(e) of this Agreement.
4.3 AUTHORIZATION; ENFORCEABILITY. The execution, delivery
and performance of this Agreement and all of the documents and
instruments required by this Agreement to be executed and delivered by
ESELCO are within the corporate power of ESELCO and: (a) have been
duly authorized by the unanimous vote of the Board of Directors of
ESELCO; and (b) upon the approval of the ESELCO Stockholders, shall be
duly authorized by all necessary corporate action. This Agreement is,
and the other documents and instruments required by this Agreement to
be executed and delivered by ESELCO will be, when executed and
delivered by ESELCO, the valid and binding obligations of ESELCO,
enforceable against ESELCO in accordance with their respective terms,
except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
generally affecting the rights of creditors and subject to general
equity principles.
4.4 NO VIOLATION OR CONFLICT. Subject to the receipt of
the approvals and consents described in Section 8.8 of this Agreement,
the execution, delivery and performance of this Agreement by ESELCO do
not and will not conflict with or violate any Law, the Articles of
Incorporation or Bylaws of any of the ESELCO Companies or any Existing
Contract.
4.5 TITLE TO ASSETS. Each of the ESELCO Companies owns
good and valid title to the assets and properties which it owns or
purports to own, free and clear of any and all Liens,
-34-
except: (a) the Existing Liens on the date of this Agreement; and (b) the
Permitted Liens on the Closing Date.
4.6 LITIGATION. Except for the Existing Litigation: (a)
there is no litigation, arbitration, proceeding, governmental
investigation, citation or action of any kind pending or, to the
Knowledge of ESELCO, proposed or threatened, against or relating to
any of the ESELCO Companies, nor, to the Knowledge of ESELCO, is
there any basis for any such action; and (b) there are no actions,
suits or proceedings pending or, to the Knowledge of ESELCO, proposed
or threatened, against any of the ESELCO Companies by any Person which
question the legality, validity or propriety of the transactions
contemplated by this Agreement.
4.7 ESELCO SEC REPORTS AND BOOKS AND RECORDS.
(a) ESELCO SEC REPORTS. The ESELCO SEC Reports: (i)
include all reports, definitive proxy statements and amendments
thereto filed or required to be filed by ESELCO with the SEC since
January 1, 1994; and (ii) did not or will not, as the case may be,
contain as of their respective dates any untrue statement of a
material 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.
(b) FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of ESELCO included in the ESELCO SEC Reports have been or
will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto and except with
respect to unaudited interim statements as permitted by Form 10-Q of
the SEC) and fairly present the consolidated financial position of the
ESELCO Companies as of the dates thereof and the results of their
operations and changes in financial position for the periods then
ended, subject, in the case of the unaudited consolidated interim
financial statements, to normal year-end and audit adjustments and any
other adjustments described therein.
(c) BOOKS AND RECORDS. The minute books of each of
the ESELCO Companies contain correct and complete records of all
actions taken by the stockholders and the Board of Directors
-35-
(including committees of the Board) of each of the ESELCO Companies,
and all signatures contained therein are the true signatures of the
Persons whose signatures they purport to be. The share transfer books
of each of the ESELCO Companies are correct, complete and current in
all respects. The accounting books and records of each of the ESELCO
Companies: (i) are in all material respects correct and complete;
(ii) are current in a manner consistent with past practice; and (iii)
have recorded therein all the properties and assets and liabilities of
the ESELCO Companies. The accounting books and records of Edison
Sault have been kept and maintained in accordance with the Uniform
System of Accounts as prescribed by the MPSC. The Disclosure Schedule
sets forth the name of each bank in which each of the ESELCO Companies
has an account or safe deposit box or with which any of the ESELCO
Companies has an arrangement for safekeeping.
4.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996
there has not been any:
(a) material adverse change in the financial
condition, properties, business or results of operations of the
ESELCO Companies taken as a whole;
(b) damage, destruction or loss (whether or not
covered by insurance) which has materially and adversely affected the
financial condition, properties, business or results of operations of
the ESELCO Companies taken as a whole;
(c) transactions by any of the ESELCO Companies
outside the ordinary course of business, except for the transactions
contemplated by this Agreement; or
(d) declaration or payment or setting aside the
payment of any dividend or any distribution in respect of the capital
stock of any of the ESELCO Companies or any direct or indirect
redemption, purchase or other acquisition of any such stock by any of
the ESELCO Companies.
4.9 BUILDINGS AND EQUIPMENT. The Buildings and the
Equipment: (a) are, taken as a whole, in good operating condition and
repair, reasonable wear and tear excepted; (b) are adequately insured
at normal competitive premium rates with the self insured retentions
specified on the Disclosure Schedule; (c) such assets and their use
conform in all respects to applicable
-36-
Laws; and (d) no notice of any violation of any building, zoning or other Law
relating to such assets or their use has been received by any of the ESELCO
Companies.
4.10 EXISTING CONTRACTS. The Existing Contracts are the
only Contracts which constitute:
(a) a lease of, or agreement to purchase or sell, any capital
assets;
(b) any union labor contracts;
(c) any management, consulting, employment, personal
service, agency or other contract or contracts providing for
employment or rendition of services and which: (i) are in writing; or
(ii) create other than an at will employment relationship; or (iii)
provide for any commission, bonus, profit sharing, incentive,
retirement, consulting or additional compensation;
(d) any agreements or notes evidencing any
Indebtedness;
(e) an agreement for the storage, transportation,
treatment or disposal of any hazardous waste or hazardous byproduct;
(f) a power of attorney (whether revocable or
irrevocable) given to any Person by any of the ESELCO Companies that
is in force;
(g) an agreement by any of the ESELCO Companies not to
compete in any business or in any geographical area;
(h) an agreement restricting the right of any of the
ESELCO Companies to use or disclose any information in its possession;
(i) a partnership, joint venture or similar
arrangement;
(j) a license;
(k) an agreement or arrangement with any Affiliate; or
-37-
(l) any other agreement which: (i) involves an amount
in excess of $10,000.00; or (ii) is not in the ordinary course of
business.
4.11 PERFORMANCE OF CONTRACTS. Each of the ESELCO Companies
has fully performed each term, covenant and condition of each Contract
which is to be performed by it at or before the date hereof. Each of
the Contracts is in full force and effect and constitutes the legal
and binding obligation of the relevant ESELCO Company and, to the
Knowledge of ESELCO, constitutes the legal and binding obligation of
the other parties thereto.
4.12 CONTINGENT AND UNDISCLOSED LIABILITIES. Except
pursuant to the deposit and collection of checks in the ordinary
course of business, none of the ESELCO Companies has guaranteed or
become a surety or is otherwise contingently liable for the obligation
of any other Person. None of the ESELCO Companies has any liabilities
of any nature except for those which: (a) are disclosed in the ESELCO
SEC Reports or in the Disclosure Schedule or in this Agreement; or (b)
arise in the ordinary course of business since December 31, 1996 and
are not required to be disclosed pursuant to this Agreement or the
Disclosure Schedule.
4.13 EXISTING INSURANCE POLICIES. All real and personal
property owned or leased by the ESELCO Companies has been and is being
insured against, and the ESELCO Companies maintain liability insurance
against, such insurable risks and in such amounts as set forth in the
Existing Insurance Policies. The Existing Insurance Policies
constitute all insurance coverage owned by the ESELCO Companies and
are in full force and effect and, to the Knowledge of Eselco, none of
the ESELCO Companies has received notice of and is not otherwise aware
of any cancellation or threat of cancellation of such insurance. No
property damage, personal injury or liability claims have been made,
or are pending, against any of the ESELCO Companies that are not
covered by insurance. Within the past two (2) years, no insurance
company has canceled any insurance (of any type) maintained by any of
the ESELCO Companies. To the Knowledge of ESELCO, the cost of any
insurance currently maintained by the ESELCO Companies will not
increase upon renewal other than increases which ESELCO reasonably
believes are consistent with the general upward trend in the cost of
obtaining insurance.
4.14 EMPLOYEE BENEFIT PLANS.
-38-
(a) EXISTING PLANS. Except for the Existing Plans,
none of the ESELCO Companies maintain, nor is bound by, any Employee
Benefit Plan. All of the Existing Plans are in compliance in all
material respects with ERISA, the Code and all other applicable Laws.
All of the Existing Plans which are intended to meet the requirements
of Section 401(a) or 403(a) of the Code have been determined to be
"qualified" within the meaning of the Code, and there are no facts
which would adversely affect the qualified status of any of such
Existing Plans.
(b) CERTAIN MATTERS. With respect to each Existing
Plan which is subject to either Title IV of ERISA or Section 412 of
the Code, there is no amount of unfunded benefit liabilities as
defined in Section 4001(a)(18) of ERISA, there has occurred no failure
to meet the minimum funding standards of Section 412 of the Code,
there is no "accumulated funding deficiency" within the meaning of
Section 412 of the Code, no such Existing Plan has terminated or has
filed a Notice of Intent to terminate, the Pension Benefit Guaranty
Corporation has not instituted proceedings to terminate any such
Existing Plan and there is no outstanding liability under Section 4062
of ERISA.
(c) PROHIBITED TRANSACTIONS; REPORTABLE EVENTS. No
prohibited transaction within the meaning of Section 4975 of the Code
or Section 406 of ERISA or reportable event as described in Section
4043 of ERISA has occurred with respect to any of the Existing Plans.
(d) OTHER LIABILITIES. None of the ESELCO Companies
has any direct, indirect, actual or contingent liability with respect
to any of the Existing Plans other than to make payments to the
Existing Plans or benefit payments from the Existing Plans in
accordance with the terms thereof.
(e) MULTIEMPLOYER PLANS. None of the ESELCO Companies
is contributing to, nor has any of the ESELCO Companies contributed to
since September 2, 1974, any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
(f) CLAIMS. There are no pending, or to the Knowledge
of ESELCO, threatened claims with respect to any of the Existing
Plans, other than claims for benefits arising in the ordinary course
of business.
-39-
4.15 NO VIOLATION OF LAW. Neither any of the ESELCO Companies nor
any of the assets of any of the ESELCO Companies violate or conflict with any
Law, or any decree, judgment or order, or any zoning, building line
restriction, planning, use or other similar restriction.
4.16 BROKERS. Except for fees to Pacific Economics Group, none of
the ESELCO Companies has incurred any brokers', finders' or any similar fee
in connection with the transactions contemplated by this Agreement.
4.17 TAXES.
(a) TAX RETURNS. Each of the ESELCO Companies has timely and
properly filed all federal, state, local and foreign tax returns (including
but not limited to income, single business, utility, franchise, sales,
payroll, employee withholding and social security and unemployment) which
were required to be filed. Each of the ESELCO Companies has paid or made
adequate provision, in reserves reflected in its financial statements
included in the ESELCO SEC Reports in accordance with generally accepted
accounting principles, for the payment of all taxes (including interest and
penalties) and withholding amounts owed by it or assessable against it. No
tax deficiencies have been proposed or assessed against any of the ESELCO
Companies and there is no basis in fact for the assessment of any tax or
penalty tax against any of the ESELCO Companies. No issue has been raised in
any prior tax audit which, by application of the same or similar principles,
could reasonably be expected upon a future tax audit to result in a proposed
deficiency for any period.
(b) AUDITS. The income tax returns of the ESELCO Companies
have been closed by audit by the Internal Revenue Service or by operation of
the applicable statute of limitations for all fiscal years through and
including December 31, 1992; the single business tax returns of the ESELCO
Companies have been closed by audit by the State of Michigan or by operation
of the applicable statute of limitations for all fiscal years through and
including December 31, 1994; and the sales and use tax returns of the ESELCO
Companies have been closed by audit by the State of Michigan for all periods
through and including April 30, 1996. None of the ESELCO Companies has
consented to any extension of the statute of limitation with respect to any
open tax returns.
-40-
(c) TAX LIENS. There are no tax Liens upon any
property or assets of any of the ESELCO Companies except for Liens for
current taxes not yet due and payable.
(d) DELIVERY OF TAX RETURNS. As soon as practicable
after the date of this Agreement, ESELCO will deliver to Wisconsin
Energy correct and complete copies of all tax returns and reports of
each of the ESELCO Companies filed for all periods not barred by the
applicable statute of limitations. No examination or audit of any tax
return or report for any period not barred by the applicable statute
of limitations has occurred, no such examination is in progress and,
to the Knowledge of ESELCO, no such examination or audit is planned.
(e) EMPLOYMENT TAXES. Each of the ESELCO Companies
has properly withheld and timely paid all withholding and employment
taxes which it was required to withhold and pay relating to salaries,
compensation and other amounts heretofore paid to its employees or
other Persons. All Forms W-2 and 1099 required to be filed with
respect thereto have been timely and properly filed.
(f) TAX SHARING AGREEMENTS. None of the ESELCO
Companies is a party to any agreement relating to allocating or
sharing any taxes.
(g) EXCESS PARACHUTE PAYMENTS. None of the ESELCO
Companies is a party to any Contract that could result, on account of
the Merger, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the
Code.
(h) LIABILITIES OF OTHER PERSONS. None of the ESELCO
Companies has any liability for taxes of any kind of any Person other
than the ESELCO Companies under any Contract, under Treasury
Regulations Section 1.1502-6 (or any similar provision of Law) as a
transferee or successor or otherwise.
4.18 EXISTING REAL ESTATE. The Existing Real Estate: (a)
constitutes all significant real property and improvements leased or
owned by any of the ESELCO Companies; (b) is not subject to any leases
or tenancies of any kind; (c) is not in the possession of any adverse
possessors; (d) has direct access to and from a public road or street;
(e) is used in a manner which
-41-
is consistent with applicable Law; (f) is, and has been since the date of
possession thereof by the relevant ESELCO Company, in the peaceful possession
of the relevant ESELCO Company; and (g) is served by all water, sewer,
electrical, telephone, drainage and other utilities required for the normal
operations of the Buildings and the Existing Real Estate.
4.19 GOVERNMENTAL APPROVALS. No permission, approval,
determination, consent or waiver by, or any declaration, filing or
registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance of
this Agreement by ESELCO and the consummation of the Merger, except
for: (a) the approvals described in Section 8.8 of this Agreement;
and (b) the filing of the Certificate of Merger as described in this
Agreement.
4.20 NO PENDING OTHER TRANSACTIONS. Except for this
Agreement, none of the ESELCO Companies is a party to or bound by any
agreement, undertaking or commitment with respect to an Other
Transaction.
4.21 INVESTMENTS. Except for the Existing Investments, none
of the ESELCO Companies owns, or has any right or obligation to
acquire, any Investment.
-42-
4.22 LABOR MATTERS.
(a) EMPLOYEE MATTERS. There is no present or former
employee of any of the ESELCO Companies who has any claim against the
ESELCO Companies, (whether under Law, under any employee agreement or
otherwise) on account of or for: (i) overtime pay, other than
overtime pay for the current payroll period; (ii) wages or salaries,
other than wages or salaries for the current payroll period; or (iii)
vacations, sick leave, time off or pay in lieu of vacation, sick leave
or time off, other than vacation, sick leave or time off (or pay in
lieu thereof) earned in the twelve-month period immediately preceding
the date of this Agreement or incurred in the ordinary course of
business and appearing as a liability on the most recent financial
statements included in the ESELCO SEC Reports.
(b) EMPLOYEE CLAIMS. There are no pending and
unresolved claims by any Person against any of the ESELCO Companies
arising out of any statute, ordinance or regulation relating to
discrimination to employees or employee practices or occupational or
safety and health standards. There is no pending or, to the Knowledge
of ESELCO, threatened, nor has any of the ESELCO Companies ever
experienced any, labor dispute, strike or work stoppage which affects
or may affect the business of the ESELCO Companies or which may or
would interfere with the continued operation of any of the ESELCO
Companies.
(c) NLRB MATTERS. There is not now pending or, to the
Knowledge of ESELCO, threatened, any charge or complaint against any
of the ESELCO Companies by or before the National Labor Relations
Board or any representative thereof, or any comparable state agency or
authority. No union organizing activities are in process or
contemplated and no petitions have been filed for union organization
or representation of employees of any of the ESELCO Companies not
presently organized, and none of the ESELCO Companies has committed
any unfair labor practices which have not heretofore been corrected
and fully remedied.
4.23 INDEBTEDNESS. Except for the Existing Indebtedness,
none of the ESELCO Companies has any Indebtedness.
4.24 SUBSIDIARIES. The only Subsidiaries of ESELCO are
Edison Sault, ESEG and NTS. Each of Edison Sault, ESEG and NTS has no
Subsidiaries.
-43-
4.25 EXISTING PERMITS. The Existing Permits constitute all
licenses, permits, approvals, franchises, qualifications, certificates
of convenience and necessity, permissions, agreements, rate orders and
governmental authorizations which the ESELCO Companies currently have
and need for the conduct of the business of the ESELCO Companies as
currently conducted.
4.26 DISCLOSURE. No statement of fact by ESELCO contained
in this Agreement, the Disclosure Schedule or the Proxy Statement, or
provided for inclusion in the Registration Statement, contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements
herein or therein contained, in the light of the circumstances under
which they were made, not misleading as of the date to which it
speaks.
4.27 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by ESELCO for inclusion or incorporation by
reference in: (a) the Registration Statement 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 misleading; and (b) the Proxy Statement will, at the date
mailed to the ESELCO Stockholders and at the time of the ESELCO
Special Meeting, 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 Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder.
4.28 VOTE REQUIRED. The affirmative vote of the holders of
a simple majority of the outstanding shares of ESELCO Common Stock is
the only vote of the holders of any class or series of capital stock
or other securities of ESELCO necessary to approve the Merger, this
Agreement and the transactions contemplated by this Agreement.
4.29 ACCOUNTING MATTERS. Neither the ESELCO Companies nor
any of the Affiliates has taken or agreed to take or will take any
action that would prevent Wisconsin Energy from
-44-
accounting for the business combination to be effected by the Merger as a
pooling-of-interests.
4.30 OPINION OF FINANCIAL ADVISOR. ESELCO has received the
opinion of Pacific Economics Group, dated the date of this Agreement,
to the effect that the consideration to be received in the Merger by
the ESELCO Stockholders is fair to the ESELCO Stockholders from a
financial point of view, and a copy of such opinion has been delivered
to Wisconsin Energy.
4.31 ENVIRONMENTAL PROTECTION.
(a) DEFINITIONS. As used in this Section 4.31 of this
Agreement:
(i) "Environmental Claim" shall mean any and all
administrative, 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
alleging potential liability (including, without limitation, potential
liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from: (A) the presence, or
release into the environment, of any Environmental Hazardous Materials
at any location, whether or not owned by any of the ESELCO Companies;
or (B) circumstances forming the basis of any violation or alleged
violation, of any Environmental Law; or (C) any and all claims by any
Person seeking damages, contribution, indemnification, cost, recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Environmental Hazardous Materials.
(ii) "Environmental Hazardous Materials" shall mean: (A)
any petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs) and radon gas; 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," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar import, under any
Environmental
-45-
Law; and (C) any other chemical, material, substance or waste, exposure to
which is now prohibited, limited or regulated by any governmental authority.
(iii) "Environmental Laws" shall mean all federal, state,
local or foreign statute, Law, rule, ordinance, code, policy, rule of common
law and regulations relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, Laws and regulations relating to Environmental Releases or
threatened Environmental Releases of Environmental Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Environmental
Hazardous Materials.
(iv) "Environmental Release" shall mean any release,
spill, emission, leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface water, groundwater
or property.
(b) ENVIRONMENTAL LAWS. Each of the ESELCO Companies: (i) is
in compliance with all applicable Environmental Laws; and (ii) has not
received any communication (written or oral), from a governmental authority,
that alleges that it is not in compliance with applicable Environmental Laws.
(c) ENVIRONMENTAL PERMITS. Each of the ESELCO Companies has
obtained all environmental, health and safety permits and governmental
authorizations (collectively, the "Environmental Permits") necessary for its
operations, and all such permits are in good standing and it is in compliance
with all terms and conditions of the Environmental Permits.
(d) ENVIRONMENTAL CLAIMS. There is no Environmental Claim
pending or, to the Knowledge of ESELCO, threatened, against any of the ESELCO
Companies or against any Person whose liability for any Environmental Claim
any of the ESELCO Companies has or may have retained or assumed either
contractually or by operation of Law, or against any real or personal
property or operations which any of the ESELCO Companies owns, leases or
manages.
-46-
(e) ENVIRONMENTAL HAZARDOUS MATERIALS. There have been no
Environmental Releases of any Environmental Hazardous Material by any of the
ESELCO Companies or by any Person on real property owned, used, leased or
operated by any of the ESELCO Companies.
(f) OWNED PROPERTIES. No real property at any time owned,
operated, used or controlled by any of the ESELCO Companies is currently
listed on the National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System, both promulgated
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or on any comparable state list, and none
of the ESELCO Companies has received any written notice from any Person under
or relating to CERCLA or any comparable state or local Law.
(g) OFF-SITE PROPERTIES. To the Knowledge of ESELCO, no
off-site location at which any of the ESELCO Companies has disposed or
arranged for the disposal of any waste is listed on the National Priorities
List or on any comparable state list and none of the ESELCO Companies has
received any written notice from any Person with respect to any off-site
location, of potential or actual liability or a written request for
information from any Person under or relating to CERCLA or any comparable
state or local Law.
(h) COSTS. The Disclosure Schedule includes an estimate by
ESELCO of future costs to the ESELCO Companies of compliance with, and
environmental cleanup and response under, Environmental Laws.
4.32 ACCOUNTS. All Accounts have arisen from bona fide transactions
by the ESELCO Companies in the ordinary course of business and, to the extent
not previously collected, are fully collectible, subject to reserves as set
forth in the financial statements included in the ESELCO SEC Reports, and no
significant portion of the Accounts is or will be on the Closing Date subject
to any counterclaim or set off.
4.33 CUSTOMERS. Since January 1, 1996 there has been no
termination, cancellation or material curtailment of the business
relationship of any of the ESELCO Companies with any customer or group of
affiliated customers whose purchases individually or in the aggregate
constituted more than five
-47-
percent (5%) of the consolidated revenues of the ESELCO Companies for the
fiscal year ended December 31, 1995, nor, to the Knowledge of ESELCO, any
notice of intent to so materially curtail.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
WISCONSIN ENERGY AND ACQUISITION
Wisconsin Energy and Acquisition hereby represent and
warrant to ESELCO that:
5.1 ORGANIZATION.
(a) ORGANIZATION. Each of Wisconsin Energy and
Acquisition is a corporation duly and validly organized and existing
under the Laws of the State of its incorporation and is qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions where the ownership or leasing of property or the
conduct of its business requires qualification as a foreign
corporation.
(b) CORPORATE POWER AND AUTHORITY. Each of Wisconsin
Energy and Acquisition has full corporate power and authority and all
franchises, permits, licenses, approvals, authorizations,
registrations, certificates of convenience and necessity, grants and
orders necessary to carry on its business as it is now conducted and
to own, lease and operate its assets and properties.
5.2 CAPITALIZATION.
(a) CAPITALIZATION. The entire authorized capital
stock of Wisconsin Energy consists of: (i) 325,000,000 shares of
Common Stock, $.01 par value, of which 112,465,540 shares were issued
and outstanding on May 1, 1997; and (ii) 15,000,000 shares of
Preferred Stock, $.01 par value, none of which are issued and
outstanding.
(b) AUTHORIZATION. All of the shares of Wisconsin
Energy Common Stock to be issued pursuant to this Agreement will be,
when issued: (i) duly authorized, validly issued and fully paid; and
(ii) nonassessable, except as provided
-48-
in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law as
judicially interpreted.
5.3 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance of this Agreement by Wisconsin Energy and Acquisition and all of
the documents and instruments required by this Agreement to be executed and
delivered by Wisconsin Energy and Acquisition: (a) are within the corporate
power of Wisconsin Energy and Acquisition; (b) have been duly authorized by
all necessary corporate action by Wisconsin Energy and Acquisition; and (c)
do not require any approval of the shareholders of Wisconsin Energy. This
Agreement is, and the other documents and instruments required by this
Agreement to be executed and delivered by Wisconsin Energy and Acquisition
will be, when executed and delivered by Wisconsin Energy and Acquisition, the
valid and binding obligations of Wisconsin Energy and Acquisition,
enforceable against Wisconsin Energy and Acquisition in accordance with their
respective terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
generally affecting the rights of creditors and subject to general equity
principles.
5.4 NO VIOLATION OR CONFLICT. Subject to the receipt of the
approvals and consents described in Section 7.9 of this Agreement, the
execution, delivery and performance of this Agreement by Wisconsin Energy and
Acquisition do not and will not conflict with or violate any Law, the
Restated Articles of Incorporation or Bylaws of Wisconsin Energy, the
Articles of Incorporation or Bylaws of Acquisition or any material contract
or agreement to which Wisconsin Energy or Acquisition is a party or by which
either of them is bound.
5.5 LITIGATION. To the knowledge of Wisconsin Energy, there are no
actions, suits or proceedings against Wisconsin Energy or Acquisition, or
both, by any Person which question the validity, legality or propriety of the
transactions contemplated by this Agreement.
5.6 WISCONSIN ENERGY SEC REPORTS.
(a) WISCONSIN ENERGY SEC REPORTS. The Wisconsin Energy SEC
Reports: (i) include all reports, definitive proxy statements and amendments
thereto filed or required to be filed by Wisconsin Energy with the SEC since
-49-
January 1, 1994; and (ii) did not or will not, as the case may be, contain as
of their respective dates any untrue statement of a material 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.
(b) FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
Wisconsin Energy included in the Wisconsin Energy SEC Reports have been or
will be, as the case may be, prepared in accordance with generally accepted
accounting principles applied on a consistent basis (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 consolidated financial position of Wisconsin Energy as of the dates
thereof and the consolidated results of its operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited consolidated interim financial statements, to normal year-end and
audit adjustments and any other adjustments described therein.
(c) CERTAIN AGREEMENT. Wisconsin Energy notified
ESELCO of the termination of the Amended and Restated Agreement and
Plan of Reorganization by and among Wisconsin Energy, Northern States
Power Company, Northern Power Wisconsin Corp. and WEC Sub Corp. dated
as of April 28, 1995 as amended and restated as of July 26, 1995.
5.7 BROKERS. Except for fees to Xxxx Xxxxxx Associates,
neither Wisconsin Energy nor Acquisition has incurred any brokers',
finders' or any similar fee in connection with the transactions
contemplated by this Agreement.
5.8 GOVERNMENTAL APPROVALS. No permission, approval,
determination, consent or waiver by, or any declaration, filing or
registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance of
this Agreement by Wisconsin Energy and Acquisition and the
consummation of the Merger, except for: (a) the approvals described
in Section 7.9 of this Agreement; and (b) the filing of the
Certificate of Merger as described in this Agreement.
5.9 DISCLOSURE. No statement of fact by Wisconsin Energy
or Acquisition contained in this Agreement or in any
-50-
documents delivered by Wisconsin Energy or Acquisition to ESELCO for use in
the Proxy Statement or the Registration Statement contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements herein or therein
contained, in the light of the circumstances under which they were made, not
misleading as of the date to which it speaks.
5.10 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Wisconsin Energy for inclusion or incorporation
by reference in: (a) the Registration Statement 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 misleading; and (b) the Proxy Statement will, at the date
mailed to the ESELCO Stockholders and at the time of the ESELCO
Special Meeting, 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 Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder, and the Registration Statement, including the Proxy
Statement insofar as it constitutes the prospectus of Wisconsin
Energy, will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations
thereunder.
ARTICLE VI
CONDUCT OF BUSINESS BY THE ESELCO COMPANIES
PENDING THE MERGER
Except with the written consent of Wisconsin Energy, from
and after the date of this Agreement and until the Effective Time of
Merger, ESELCO shall, and shall cause each of Edison Sault, ESEG and
NTS to:
6.1 CARRY ON IN REGULAR COURSE. Diligently carry on its
business in the regular course and substantially in the same manner as
heretofore and shall not make or institute any unusual
-51-
or novel methods of purchase, sale, lease, management, accounting or
operation.
6.2 USE OF ASSETS. Use, operate, maintain and repair all
of its assets and properties in a normal business manner.
6.3 NO DEFAULT. Not do any act or omit to do any act, or
permit any act or omission to act, which will cause a breach of any of
the Contracts.
6.4 EXISTING INSURANCE POLICIES. Use reasonable efforts to
maintain all of the Existing Insurance Policies in full force and
effect.
6.5 EMPLOYMENT MATTERS. Not: (a) except as described in
the Disclosure Schedule, grant any increase in the rate of pay of any
of its employees; (b) institute or amend any Employee Benefit Plan; or
(c) enter into or modify any written employment arrangement with any
Person.
6.6 CONTRACTS AND COMMITMENTS. Not enter into any contract
or commitment or engage in any transaction not in the usual and
ordinary course of business and consistent with its normal business
practices and, except as described in the Disclosure Schedule, not
purchase, lease, sell or dispose of any capital asset.
6.7 INDEBTEDNESS; INVESTMENTS. Not: (a) make any
Investment; or (b) create, incur or assume any Indebtedness, except
for Indebtedness incurred in the ordinary course of business by the
ESELCO Companies as described in the Disclosure Schedule.
6.8 PRESERVATION OF RELATIONSHIPS. Use its reasonable best
efforts to preserve its business organization intact, to retain the
services of its present officers and key employees and to preserve the
goodwill of suppliers, customers, creditors and others having business
relationships with it.
6.9 COMPLIANCE WITH LAWS. Comply in all respects with all
applicable Laws.
6.10 TAXES. Timely and properly file all federal, state,
local and foreign tax returns which are required to be
-52-
filed, and shall pay or make provision for the payment of all taxes owed by
it.
6.11 AMENDMENTS. Not amend its Articles of Incorporation or
Bylaws, except that ESELCO may amend its Articles of Incorporation to
increase the authorized number of shares of ESELCO Common Stock from
3,000,000 shares to 9,840,000.
6.12 DIVIDENDS; REDEMPTIONS; ISSUANCE OF STOCK. Not:
(a) except for ESELCO's 3% stock dividend payable to
ESELCO Stockholders on May 15, 1997, issue any additional shares of
stock of any class (including any shares of preferred stock) or grant
any warrants, options or rights to subscribe for or acquire any
additional shares of stock of any class;
(b) declare or pay any dividend or make any capital
or surplus distributions of any nature, except for: (i) cash dividends
by Edison Sault, ESEG or NTS to ESELCO; and (ii) regular quarterly
cash dividends by ESELCO on the outstanding ESELCO Common Stock with
usual record and payment dates not exceeding, during any fiscal year
of ESELCO, 106% of the cash dividends paid by ESELCO on the ESELCO
Common Stock during the immediately preceding fiscal year of ESELCO;
or
(c) directly or indirectly redeem purchase or
otherwise acquire, recapitalize or reclassify any of its capital stock
or liquidate in whole or in part.
-53-
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
WISCONSIN ENERGY AND ACQUISITION
Each and every obligation of Wisconsin Energy and Acquisition to be
performed on the Closing Date and at the Effective Time of Merger shall be
subject to the satisfaction prior to or at the Closing and as of the
Effective Time of Merger of the following express conditions precedent:
7.1 COMPLIANCE WITH AGREEMENT. ESELCO shall have performed and
complied in all material respects with all of its obligations under this
Agreement which are to be performed or complied with by it prior to or on the
Closing Date and as of the Effective Time of Merger.
7.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Wisconsin Energy, and ESELCO
shall have made available to Wisconsin Energy for examination the originals
or true and correct copies of all documents Wisconsin Energy may reasonably
request in connection with the transactions contemplated by this Agreement.
7.3 NO LITIGATION. No suit, action or other proceeding shall be
pending or threatened before any court in which the consummation of the
transactions contemplated by this Agreement is restrained or enjoined or in
which the relief requested is to restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement.
7.4 REPRESENTATIONS AND WARRANTIES OF ESELCO. The representations
and warranties made by ESELCO in this Agreement shall be true and correct in
all material respects when made, as of the Closing Date and as of the
Effective Time of Merger with the same force and effect as though said
representations and warranties had been made on the Closing Date, subject to
Section 3.4(b) of this Agreement with respect to the Closing Date and the
Effective Time of Merger.
7.5 NO ESELCO MATERIAL ADVERSE EFFECT. During the period from the
date of this Agreement to the Closing Date and as
-54-
of the Effective Time of Merger there shall not have occurred, and there
shall not exist on the Closing Date and as of the Effective Time of Merger,
any ESELCO Material Adverse Effect, whether or not previously disclosed
pursuant to Section 3.4(b) of this Agreement.
7.6 APPROVAL OF ESELCO STOCKHOLDERS; CERTIFICATE OF MERGER.
This Agreement, the Merger and the transactions contemplated by this
Agreement shall have received the requisite approval and authorization
of the ESELCO Stockholders. The Certificate of Merger and the Plan of
Merger shall have been executed and delivered by ESELCO.
7.7 DELIVERIES AT CLOSING. ESELCO shall have delivered to
Wisconsin Energy the following documents, each properly executed and
dated the Closing Date: (a) the ESELCO Closing Certificate; and (b)
the ESELCO Counsel Opinion.
7.8 OTHER DOCUMENTS. ESELCO shall have delivered to
Wisconsin Energy such certificates and documents of officers of ESELCO
and public officials as shall be reasonably requested by Wisconsin
Energy to establish the existence of the ESELCO Companies and the due
authorization of this Agreement and the transactions contemplated by
this Agreement by ESELCO.
7.9 GOVERNMENTAL APPROVALS.
(a) REGULATORY APPROVALS. There shall have been
secured such permissions, approvals, determinations, consents and
waivers from all appropriate state and federal regulatory authorities,
including FERC and SEC, as may be required by Law or by such Persons:
(i) in order for Wisconsin Energy and Acquisition to consummate the
Merger and the transactions described in this Agreement; and (ii) so
that Wisconsin Energy is either an exempt holding company under PUHCA
or a registered holding company under PUHCA.
(b) REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective under the Securities Act
and shall not be the subject of any stop order or proceedings to
effect a stop order. The Wisconsin Energy Common Stock issuable
pursuant to the Merger shall have been registered or shall be exempt
from registration under applicable state "blue sky" or securities
Laws.
-55-
(c) HSR ACT. All necessary requirements of the HSR
Act shall have been complied with and any "waiting periods" applicable
to the Merger and to the transactions described in this Agreement
which are imposed by the HSR Act shall have expired prior to the
Closing Date or shall have been terminated by the appropriate agency.
(d) EFFECT OF APPROVALS. No permission, approval,
determination, consent or waiver received pursuant to Sections 7.9(a),
7.9(b) or 7.9(c) of this Agreement shall contain any condition
applicable to the ESELCO Companies, Wisconsin Energy or Acquisition,
or any one or more of them, which is, in the reasonable judgment of
Wisconsin Energy, materially adverse in any manner to the ESELCO
Companies, Wisconsin Energy or Acquisition.
7.10 LISTING. Wisconsin Energy shall have received notice
from the New York Stock Exchange that the shares of Wisconsin Energy
Common Stock to be issued pursuant to this Agreement are approved for
listing on the New York Stock Exchange subject to official notice of
issuance.
7.11 TAX OPINION. Wisconsin Energy shall have received an
opinion of Xxxxxxx & Xxxxx, counsel to Wisconsin Energy, to the effect
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that Wisconsin Energy, Acquisition and ESELCO will each be a party to
that reorganization within the meaning of Section 368(b) of the Code,
dated on or about the date that is two business days prior to the date
the Proxy Statement is first mailed to ESELCO Stockholders, and such
opinion shall not have been withdrawn or modified in any material
respect as of the Closing Date and the Effective Time of Merger.
7.12 ACCOUNTANT LETTERS. Wisconsin Energy shall have
received a copy of each of the following letters from Xxxxxx
Xxxxxxxx LLP, each of which shall be in form and substance reasonably
satisfactory to Wisconsin Energy and shall contain information
concerning the financial condition of ESELCO: (a) the letter
described in Section 3.9 of this Agreement; (b) a similar letter dated
the date of the mailing of the Proxy Statement; and (c) a similar
letter dated the Closing Date.
-56-
7.13 POOLING OPINION. Wisconsin Energy shall have received
an opinion from Price Waterhouse LLP to the effect that the Merger
qualifies for pooling-of-interests accounting treatment if consummated
in accordance with this Agreement.
7.14 AFFILIATE LETTERS. Wisconsin Energy shall have
received an Affiliate Letter from each Person who is an Affiliate.
7.15 FRACTIONAL SHARES. The aggregate of the fractional
share interests in Wisconsin Energy Common Stock to be paid in cash
pursuant to Section 2.8(e) of this Agreement shall not be more than 5%
of the maximum aggregate number of shares of Wisconsin Energy Common
Stock which could be issued as a result of the Merger.
-57-
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF ESELCO
Each and every obligation of ESELCO to be performed on the
Closing Date and at the Effective Time of Merger shall be subject to
the satisfaction prior to or at the Closing and as of the Effective
Time of Merger of the following express conditions precedent:
8.1 COMPLIANCE WITH AGREEMENT. Wisconsin Energy and
Acquisition shall have performed and complied in all material respects
with all of their obligations under this Agreement which are to be
performed or complied with by them prior to or on the Closing Date and
as of the Effective Time of Merger.
8.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All
proceedings, corporate or other, to be taken in connection with the
transactions contemplated by this Agreement, and all documents
incident thereto, shall be reasonably satisfactory in form and
substance to ESELCO, and Wisconsin Energy and Acquisition shall have
made available to ESELCO for examination the originals or true and
correct copies of all documents which ESELCO may reasonably request in
connection with the transactions contemplated by this Agreement.
8.3 NO LITIGATION. No suit, action or other proceeding
shall be pending before any court in which the consummation of the
transactions contemplated by this Agreement is restrained or enjoined.
8.4 REPRESENTATIONS AND WARRANTIES OF WISCONSIN ENERGY AND
ACQUISITION. The representations and warranties made by Wisconsin
Energy and Acquisition in this Agreement shall be true and correct in
all material respects when made, as of the Closing Date and as of the
Effective Time of Merger with the same force and effect as though such
representations and warranties had been made on the Closing Date.
8.5 APPROVAL OF ESELCO STOCKHOLDERS; CERTIFICATE OF MERGER.
This Agreement, the Merger and the other transactions contemplated by
this Agreement shall have received the requisite approval and
authorization of the ESELCO Stockholders. The
-58-
Certificate of Merger and the Plan of Merger shall have been executed and
delivered by Acquisition.
8.6 DELIVERIES AT CLOSING. Wisconsin Energy and
Acquisition shall have delivered to ESELCO the following documents,
each properly executed and dated the Closing Date: (a) the Wisconsin
Energy Closing Certificate; and (b) the Wisconsin Energy Counsel
Opinion.
8.7 OTHER DOCUMENTS. Wisconsin Energy shall have delivered
to ESELCO such certificates and documents of officers of Wisconsin
Energy and Acquisition and of public officials as shall be reasonably
requested by ESELCO to establish the existence of Wisconsin Energy and
Acquisition and the due authorization of this Agreement and the
transactions contemplated by this Agreement by Wisconsin Energy and
Acquisition.
8.8 GOVERNMENTAL APPROVALS.
(a) REGULATORY APPROVALS. There shall have been
secured such permissions, approvals, determinations, consents and
waivers from all appropriate state and federal regulatory authorities,
including FERC and SEC, as may be required by Law or by such Persons
in order for ESELCO to consummate the Merger and the transactions
described in this Agreement.
(b) REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective under the Securities Act
and shall not be the subject of any stop order or proceedings to
effect a stop order. The Wisconsin Energy Common Stock issuable
pursuant to the Merger shall have been registered or shall be exempt
from registration under applicable state "blue sky" or securities
Laws.
(c) HSR ACT. All necessary requirements of the HSR
Act shall have been complied with and any "waiting periods" applicable
to the Merger and to the transactions described in this Agreement
which are imposed by the HSR Act shall have expired prior to the
Closing Date or shall have been terminated by the appropriate agency.
8.9 TAX OPINION. ESELCO shall have received an opinion of
Xxxxxxx & Xxxxx, counsel to Wisconsin Energy, to the effect that the
Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a)
-59-
of the Code, and that Wisconsin Energy, Acquisition and ESELCO will each be a
party to that reorganization within the meaning of Section 368(b) of the
Code, dated on or about the date that is two business days prior to the date
the Proxy Statement is first mailed to ESELCO Stockholders, and such opinion
shall not have been withdrawn or modified in any material respect as of the
Closing Date and the Effective Time of Merger.
8.10 ACCOUNTANT LETTERS. ESELCO shall have received a copy of each
of the following letters from Price Waterhouse LLP, each of which shall be in
form and substance reasonably satisfactory to ESELCO and shall contain
information concerning the financial condition of Wisconsin Energy: (a) the
letter described in Section 3.10 of this Agreement; (b) a similar letter
dated the date of the mailing of the Proxy Statement; and (c) a similar
letter dated the Closing Date.
8.11 NO MATERIAL ADVERSE CHANGE. During the period from the date of
this Agreement to the Closing Date there shall not have occurred any event,
condition or fact which is continuing on the Closing Date and which is
materially adverse to the financial condition of Wisconsin Energy and the
Subsidiaries of Wisconsin Energy, taken as a whole.
8.12 LISTING. Wisconsin Energy shall have received notice from the
New York Stock Exchange that the shares of Wisconsin Energy Common Stock to
be issued pursuant to this Agreement are approved for listing on the New York
Stock Exchange subject to official notice of issuance.
ARTICLE IX
TERMINATION; MISCELLANEOUS
9.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing (whether before or after approval of this Agreement by
the ESELCO Stockholders), as follows:
(a) by mutual written agreement of Wisconsin Energy
and ESELCO;
-60-
(b) by Wisconsin Energy if any of the conditions set
forth in Article VII of this Agreement shall not have been fulfilled
by the Closing;
(c) by ESELCO if any of the conditions set forth in
Article VIII of this Agreement shall not have been fulfilled by the
Closing;
(d) by Wisconsin Energy pursuant to Section 3.4(b) of
this Agreement;
(e) by ESELCO pursuant to Section 3.8(d) of this
Agreement; or
(f) by either Wisconsin Energy or ESELCO if the
Closing has not occurred on or before December 31, 1998 (the "Initial
Termination Date"), provided however that if on the Initial
Termination Date the conditions to the Closing set forth in Sections
7.9 and 8.8 of this Agreement shall not have been fulfilled, then the
Initial Termination Date shall be extended to June 30, 1999.
9.2 RIGHTS ON TERMINATION; WAIVER. If this Agreement is
terminated pursuant to Section 9.1 of this Agreement, all further
obligations of the parties under or pursuant to this Agreement shall
terminate without further liability of any party (including its
directors, officers, employees, agents, legal, accounting or financial
advisors or other representatives) to the others, provided that: (a)
the obligations of Wisconsin Energy and Acquisition contained in
Sections 3.3(b), 3.13, 9.2, 9.4, 9.5, 9.8, 9.12 and 9.13 of this
Agreement shall survive any such termination; (b) the obligations of
ESELCO contained in Sections 3.8(e) (except as described in Section
3.8(f) of this Agreement), 3.13, 9.2, 9.4, 9.5, 9.7, 9.8, 9.12 and
9.13 of this Agreement shall survive any such termination; and (c)
each party to this Agreement shall retain any and all remedies which
it may have for breach of contract provided by Law based on another
party's willful failure to comply with the terms of this Agreement.
If any of the conditions set forth in Article VII of this Agreement
have not been satisfied, Wisconsin Energy may nevertheless elect to
proceed with the consummation of the transactions contemplated by this
Agreement and if any of the conditions set forth in Article VIII of
this Agreement have not been satisfied, ESELCO may nevertheless elect
to proceed with the consummation of the transactions contemplated by
this Agreement.
-61-
Any such election to proceed shall be evidenced by a certificate signed on
behalf of the waiving party by an officer of that party.
9.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants of the parties contained in this
Agreement (other than the covenants contained in Sections 2.8, 2.9, 2.10,
9.3, 9.4, 9.5, 9.8 and 9.15 of this Agreement) or made pursuant to this
Agreement shall terminate and be of no further force and effect at the
Effective Time of Merger and none of the parties shall have any liability or
obligation with respect thereto.
9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the documents
referred to in this Agreement and required to be delivered pursuant to this
Agreement constitute the entire agreement among the parties pertaining to the
subject matter of this Agreement, and supersede the Letter of Intent and all
prior and contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement, except as specifically
set forth in this Agreement. This Agreement may be amended by the parties at
any time before or after approval of this Agreement by the ESELCO
Stockholders, except that after such approval, no amendment shall be made
without the further approval of the ESELCO Stockholders if any such
amendment: (a) changes the Exchange Ratio; or (b) materially adversely
affects the rights of the ESELCO Stockholders. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision of this Agreement, whether or not similar, nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
9.5 EXPENSES. (a) All costs and expenses incurred in
connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses,
except that: (i) Wisconsin Energy shall pay the filing fee relating to
the filing required by the HSR Act; and (ii) those expenses incurred
in connection with printing the Proxy Statement and Registration
Statement, as well as the
-62-
filing fee relating thereto, shall be shared equally by ESELCO, on the one
hand, and Wisconsin Energy, on the other hand.
(b) The Disclosure Schedule includes an estimate by
ESELCO of all costs and expenses incurred or to be incurred by ESELCO
in connection with the transactions contemplated by this Agreement
except for those costs shared by ESELCO pursuant to Section 9.5(a) of
this Agreement.
9.6 GOVERNING LAW. This Agreement shall be construed and
interpreted according to the Laws of the State of Michigan.
9.7 ASSIGNMENT. Prior to the Effective Time of Merger,
this Agreement shall not be assigned:
(a) by ESELCO except with the prior written consent of
Wisconsin Energy; and
(b) by Wisconsin Energy or Acquisition, except: (i)
with the prior written consent of ESELCO; or (ii) to a Subsidiary of
Wisconsin Energy; or (iii) in connection with a sale or transfer of
all or substantially all of the assets of Wisconsin Energy or a
reorganization, merger, tender offer, consolidation or similar
transaction affecting all or substantially all of the outstanding
equity interests of Wisconsin Energy.
9.8 NOTICES. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to
have been given at the earlier of the date when actually delivered to
an officer of a party by personal delivery or telephonic facsimile
transmission or when deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and
addressed as follows, unless and until any of such parties notifies
the others in accordance with this Section of a change of address:
If to Wisconsin Energy or Wisconsin Energy Corporation
Acquisition: Attention: Xxxxxx X. Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
-63-
with a copy to:
Xxxxxxx & Xxxxx
Attention: Xxxxxxx X. Xxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
If to ESELCO: ESELCO, Inc.
Attention: Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxx. Xxxxx, XX 00000
Fax No: 000-000-0000
with a copy to:
Xxxxx Xxxx
Attention: Xxx X. Xxxxxxxxx
The Omaha Building
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Fax No: 000-000-0000
9.9 COUNTERPARTS; HEADINGS. This Agreement may be executed
in several counterparts, each of which shall be deemed an original,
but such counterparts shall together constitute but one and the same
Agreement. The Table of Contents and Article and Section headings in
this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
9.10 INTERPRETATION. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend
to and include the plural, all words in the plural number shall extend
to and include the singular, and all words in any gender shall extend
to and include all genders. The language used in this Agreement shall
be deemed to be language chosen by the parties to this Agreement to
express their mutual intent. In the event an ambiguity or question of
intent or interpretation arises concerning the language of this
Agreement, this Agreement shall be construed as if drafted jointly by
the parties to this Agreement and no presumption or burden of proof
will arise favoring or disfavoring any party to this Agreement by
virtue of the authorship of any of the provisions of this Agreement.
-64-
9.11 SEVERABILITY. If any provision, clause, or part of
this Agreement, or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement, or
the application of such provision, clause or part under other
circumstances, shall not be affected thereby unless such invalidity
materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
9.12 SPECIFIC PERFORMANCE. The parties agree that the
assets and business of the ESELCO Companies as a going concern
constitute unique property. There is no adequate remedy at Law for
the damage which any party might sustain for failure of the other
parties to consummate the Merger and the transactions contemplated by
this Agreement, and accordingly, each party shall be entitled, at its
option, to the remedy of specific performance to enforce the Merger
pursuant to this Agreement.
9.13 NO RELIANCE. Except for the parties to this Agreement
and any assignees permitted by Section 9.7 of this Agreement: (a) no
Person is entitled to rely on any of the representations, warranties
and agreements of the parties contained in this Agreement; and (b) the
parties assume no liability to any Person because of any reliance on
the representations, warranties and agreements of the parties
contained in this Agreement.
9.14 EXHIBITS AND DISCLOSURE SCHEDULE. If a document or
matter is disclosed in any Exhibit to this Agreement or in the
Disclosure Schedule, it shall be deemed to be disclosed for all
purposes of this Agreement without the necessity of specific
repetition or cross-reference. All capitalized terms used in any
Exhibit to this Agreement or in the Disclosure Schedule shall have the
definitions specified in this Agreement.
9.15 FURTHER ASSURANCES. If, at any time after the
Effective Time of Merger, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets,
properties, rights, privileges, powers and franchises of either
Acquisition or ESELCO, the officers of the Surviving Corporation are
fully authorized to take any such action in the name of Acquisition or
ESELCO.
-65-
IN WITNESS WHEREOF, the parties have caused this Amended and
Restated Agreement and Plan of Reorganization to be duly executed as
of the day and year first above written.
WISCONSIN ENERGY CORPORATION
By ____________________________________
Xxxxxxx X. Xxxxx,
Chairman of the Board, President and
Chief Executive Officer
Attest:
_______________________________________
Xxxxxx X. Xxxxxxx,
Assistant Secretary
ESELCO, INC
By ____________________________________
Xxxxxxx X. Xxxxxxx, President and
Chief Executive Officer
Attest:
______________________________________
Xxxxxx X. Xxxxxx, Secretary
ESL ACQUISITION, INC.
By ___________________________________
Xxxxxxx X. Xxxxx,
Chairman of the Board, President
and Chief Executive Officer
Attest:
-66-
______________________________________
Xxxxxx X. Xxxxxxx,
Assistant Secretary
-67-
EXHIBITS
TO
AGREEMENT AND PLAN
OF
REORGANIZATION
1. Form of Affiliate Letter
2. Form of ESELCO Closing Certificate
3. Form of ESELCO Counsel Opinion
4. Form of Plan of Merger
5. Form of Wisconsin Energy Closing Certificate
6. Form of Wisconsin Energy Counsel Opinion
EXHIBIT 1
AFFILIATE LETTER
______________, 19__
_______________________
Name of Affiliate
Wisconsin Energy Corporation
000 X. Xxxxxxxx Xxxxxx
P.O. Box 2949
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of the meeting of
stockholders of ESELCO, Inc. ("ESELCO") to vote on the transaction
described below, and as of the date hereof, I may be deemed an
"affiliate" (as that term is defined for purposes of Rule 145(c) and
(d) under the Securities Act of 1933, as amended (the "Act")) of
ESELCO. Pursuant to the terms of the Amended and Restated Agreement
and Plan of Reorganization dated as of May 13, 1997 as amended and
restated as of July 11, 1997 (the "Reorganization Agreement") among
ESELCO, Wisconsin Energy Corporation ("Wisconsin Energy") and ESL
Acquisition, Inc. ("Acquisition") Acquisition will be merged with and
into ESELCO in a transaction (the "Merger") in which I will receive
shares of $.01 par value common stock of Wisconsin Energy (the
"Shares") in exchange for shares of common stock of ESELCO which I own
at the "Effective Time of Merger" (as that term is defined in the
Reorganization Agreement).
In connection with the Merger, I represent and warrant to,
and agree with, Wisconsin Energy that:
1. I have carefully read this Affiliate Letter and
discussed its requirements and other applicable limitations upon the
sale, transfer or other disposition of the Shares, to the extent I
felt necessary, with my counsel or counsel for ESELCO.
Wisconsin Energy Corporation
_____________________, 199___
Page 2
2. I have carefully read the Reorganization Agreement
relating to the Merger and discussed its requirements and its impact
upon my ability to sell, transfer or otherwise dispose of the Shares,
to the extent I felt necessary, with my counsel or counsel for ESELCO.
3. I have been informed by Wisconsin Energy that the
distribution by me of the Shares has not been registered under the Act
and that the Shares must be held by me indefinitely unless (i) such
distribution of the Shares has been registered under the Act, (ii) a
sale of the Shares is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Securities and Exchange
Commission (the "Commission") under the Act (and otherwise in
accordance with Rule 144 under the Act if I am an affiliate of
Wisconsin Energy and if so required at the time), or (iii) some other
exemption from registration is available with respect to any such
proposed sale, transfer or other disposition of the Shares in the
opinion of counsel satisfactory to Wisconsin Energy. I agree that I
will not make any sale, transfer or other disposition of the Shares in
violation of the Act or the rules and regulations of the Commission
thereunder.
4. I understand that Wisconsin Energy is under no
obligation to register the sale, transfer or other disposition of the
Shares by me or on my behalf or to take any other action necessary in
order to make compliance with an exemption from registration
available, except for Wisconsin Energy's customary procedures in
connection with sales of its stock in conformity with Rule 145. By
accepting this Affiliate Letter, Wisconsin Energy agrees to exert its
best efforts to timely file with the Commission all of the reports it
is required to file under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
5. I also understand Wisconsin Energy may decline to
register any transfer of the Shares inconsistent with this Affiliate
Letter, that stop transfer instructions will be given to Wisconsin
Energy's transfer agent(s) with respect to the Shares
Wisconsin Energy Corporation
_____________________, 199___
Page 3
and that there will be placed on the certificates for the Shares, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended (the "Act"), applies and may be sold or otherwise
transferred only in compliance with the limitations of such Rule 145, or
upon receipt by Wisconsin Energy Corporation of an opinion of counsel
acceptable to it that some other exemption from registration under the
Act is available, or pursuant to a registration statement under the Act.
The shares represented by this certificate may not be sold or otherwise
transferred prior to the publication by Wisconsin Energy Corporation of
post-transaction combined financial results covering at least 30 days of
operations subsequent to [insert date of Effective Time of Merger under
the Reorganization Agreement]."
By accepting this Affiliate Letter, Wisconsin Energy agrees that upon
my request and delivery to the transfer agent(s) of such legended
certificates and after passage of the period referred to in the second
sentence of such legend, it will instruct the transfer agent(s) to
deliver to me substitute certificates of Wisconsin Energy common stock
with a legend consisting solely of the first sentence of the legend
set forth above.
6. I have no present plan or intention to sell, exchange
or otherwise dispose of the Shares to be received by me in the Merger.
7. I have not, within the 30 days prior to the date hereof,
sold, transferred, or otherwise disposed of, or reduced my risk
relative to, any shares of ESELCO or Wisconsin Energy capital stock
beneficially owned by me and, notwithstanding the other provisions
hereof, I will not sell, transfer, or otherwise dispose of, or reduce
my risk relative to, any Shares received by me in
Wisconsin Energy Corporation
_____________________, 199___
Page 4
the Merger or any other shares of Wisconsin Energy capital stock which I may
beneficially own until after such time as financial results covering at least
30 days of post-Merger combined operations of Wisconsin Energy and ESELCO
have been published by Wisconsin Energy, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a
report to the Commission on Form 10-K, 10-Q or 8-K, or other public filing or
announcement which includes the combined financial results of operations. I
understand that, until such time, Wisconsin Energy may refuse to register
such transfer and that stop transfer instructions will be given to Wisconsin
Energy's transfer agent(s) with respect to the Shares or such other shares of
Wisconsin Energy capital stock.
It is understood and agreed that this Affiliate Letter shall
terminate and be of no further force and effect and the legend set
forth in paragraph 5 above shall be removed by delivery of substitute
certificates without such legend, and the related stock transfer
restrictions shall be lifted forthwith, if the period of time
specified in paragraph 7 above has passed and:
(a) my Shares shall have been registered under the Act for
sale, transfer or other disposition by me or on my behalf; or
(b) I am not at the time (and, if clause (ii) below
applies, I have not been for at least the preceding three months) an
affiliate of Wisconsin Energy and have beneficially owned the Shares
for at least (i) one (1) year (or such other period as may be
prescribed by the Act, and the rules promulgated thereunder) and
Wisconsin Energy has filed with the Commission all of the reports it
is required to file under the Exchange Act, during the preceding
twelve (12) months, or (ii) two (2) years (or such other period as may
be prescribed by the Act and the rules thereunder) if the
aforementioned condition as to filing reports with the Commission has
not been met; or
Wisconsin Energy Corporation
_____________________, 199___
Page 5
(c) Wisconsin Energy shall have received a letter from the
staff of the Commission, or an opinion of Xxxxxxx & Xxxxx or other
counsel acceptable to Wisconsin Energy, to the effect that the stock
transfer restrictions and the legend are not required.
Very truly yours,
_____________________________
Accepted as of the ____ day of
________________, 19__.
WISCONSIN ENERGY CORPORATION
By: ___________________________
EXHIBIT 2
ESELCO, INC.
CLOSING CERTIFICATE
I, _____________, do hereby certify that:
1. I am the duly elected, qualified and acting __________
of ESELCO, Inc., a Michigan corporation ("ESELCO").
2. I am familiar with the terms of the Amended and
Restated Agreement and Plan of Reorganization (the "Reorganization
Agreement"), dated as of May 13, 1997 as amended and restated as of
July 11, 1997, by and among ESELCO, ESL Acquisition, Inc., a Michigan
corporation ("Acquisition") and Wisconsin Energy Corporation, a
Wisconsin corporation ("Wisconsin Energy").
3. I make this Certificate pursuant to the provisions of
Section 7.7(a) of the Reorganization Agreement with the intention that
it shall be relied upon by Acquisition and Wisconsin Energy.
4. ESELCO has performed and complied in all material
respects with all of its obligations under the Reorganization
Agreement which are to be performed or complied with by it prior to or
on the date hereof.
5. The representations and warranties made by ESELCO in
the Reorganization Agreement are true and correct in all material
respects as of the date hereof with the same force and effect as
though said representations and warranties had been made on the date
hereof.
IN WITNESS WHEREOF, I have executed this Certificate in my
official capacity on this ____ day of _________, 199___.
ESELCO, INC.
By: _______________________________
[LETTERHEAD]
EXHIBIT 3
________________, 199_
Wisconsin Energy Corporation
Attention: Xxxxxx X. Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx
P.O. Box 2949
Milwaukee, Wisconsin 53201
Gentlemen and Ladies:
We have acted as counsel for ESELCO, Inc., a Michigan
corporation ("ESELCO"), in connection with the negotiation,
preparation, execution and delivery of the Amended and Restated
Agreement and Plan of Reorganization, dated as of May 13, 1997 as
amended and restated as of July 11, 1997 (the "Reorganization
Agreement"), by and among Wisconsin Energy Corporation ("Wisconsin
Energy"), ESL Acquisition, Inc. ("Acquisition") and ESELCO, and the
transactions contemplated thereby. We are furnishing this opinion at
the request of ESELCO pursuant to Section 7.7(b) of the Reorganization
Agreement. Capitalized terms not otherwise defined herein have the
meanings assigned to them in the Reorganization Agreement.
In rendering this opinion, we have examined such corporate
records, certificates, instruments and other documents of the ESELCO
Companies and questions and matters of law, as we have considered
necessary and appropriate for purposes of this opinion. In giving the
various opinions set forth below, we have, with respect to factual
matters, relied on certificates and similar documents furnished by
public officials and by officers of the ESELCO Companies (which
include a certification of ESELCO's officers of the accuracy of the
representations and warranties made by ESELCO in the Reorganization
Agreement).
Wisconsin Energy Corporation
_____________________, 199___
Page 2
We have assumed that: (i) all certificates of public
officials examined by us are accurate; (ii) each document submitted to
us as an original is authentic and complete; (iii) each document
submitted to us as a certified or photostatic copy conforms to an
authentic original; (iv) each of the parties (other than ESELCO) to
the Reorganization Agreement has duly and validly executed and
delivered the Reorganization Agreement; (v) all signatures (other than
the signatures on behalf of ESELCO) on documents reviewed by us are
genuine; (vi) each person executing the Reorganization Agreement
(other than on behalf of ESELCO) on behalf of such party is authorized
to do so; (vii) the obligations of each party (other than ESELCO)
under the Reorganization Agreement are such party's legal, valid and
binding obligations, enforceable in accordance with the terms of the
Reorganization Agreement; (viii) the Reorganization Agreement
accurately describes and contains the mutual understanding of the
parties; and (ix) there are no oral or written statements or
agreements that purport to modify, amend or vary any of the terms of
the Reorganization Agreement.
Based upon the foregoing, and subject to the qualifications,
assumptions and limitations set forth herein, it is our opinion that:
1. Each of the ESELCO Companies is a corporation duly
incorporated, validly existing and in good standing under the Laws of
the State of Michigan, and has the requisite corporate power and
authority to carry on its business as now being conducted.
2. ESELCO has the necessary corporate power and authority
to enter into, execute and deliver the Reorganization Agreement, to
perform its obligations thereunder and to consummate the transactions
contemplated thereby.
3. The execution and delivery of the Reorganization Agreement by
ESELCO and the consummation by ESELCO of the
Wisconsin Energy Corporation
_____________________, 199___
Page 3
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of ESELCO.
4. The Reorganization Agreement has been duly executed and
delivered by ESELCO and constitutes a legal, valid and binding
obligation of ESELCO, enforceable against ESELCO in accordance with
its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws generally affecting the rights of creditors and subject
to general equity principles.
5. The execution and delivery of the Reorganization
Agreement by ESELCO, do not, and the performance of the Reorganization
Agreement by ESELCO will not, conflict with or violate: (a) the
Articles of Incorporation or Bylaws of ESELCO; or (b) any material
federal or Michigan state or local Law, rule, regulation, order or
governmental requirement applicable to any of the ESELCO Companies or
by which any of its properties is bound or affected.
6. The entire authorized capital stock of ESELCO consists
of: (a) 9,840,000 shares of Common Stock, $0.01 par value, of which
1,593,180 shares are issued and outstanding and no shares are held by
any of the ESELCO Companies; and (b) 160,000 shares of Preferred
Stock, $0.01 par value, none of which are issued and outstanding.
7. The entire authorized capital stock of Edison Sault
consists of: (a) 3,000,000 shares of Common Stock, $1.00 par value, of
which 673,929 shares are issued and outstanding, all of which are
owned by ESELCO; and (b) 160,000 shares of Preferred Stock, $25.00 par
value, none of which are issued and outstanding.
8. The entire authorized capital stock of ESEG consists of
100 shares of Common Stock, $0.01 par value, of
Wisconsin Energy Corporation
_____________________, 199___
Page 4
which 100 shares are issued and outstanding, all of which are owned by ESELCO.
9. The entire authorized capital stock of NTS consists of
100 shares of Common Stock, $0.01 par value, of which 100 shares are
issued and outstanding, all of which are owned by ESELCO.
10. All of the issued and outstanding shares of capital
stock of each of the ESELCO Companies are duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights.
To our knowledge after due inquiry, there are no options, warrants,
conversion rights or other rights to subscribe for or purchase, or
other contracts with respect to, any capital stock of any of the
ESELCO Companies (except for the Reorganization Agreement).
11. The Proxy Statement (excluding the financial statements
and other financial and statistical information included or
incorporated by reference therein or omitted therefrom, and all
information about, or supplied or omitted by, Wisconsin Energy and
Acquisition for use in the Proxy Statement, as to all of which we do
not express any opinion), at the date it was first mailed to holders
of ESELCO Common Stock and at the time of the ESELCO Special Meeting,
complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder.
We have participated in the preparation and filing of the
Proxy Statement and the Registration Statement and, in the course of
such preparation, in conferences with certain officers and employees
of the ESELCO Companies and representatives of Wisconsin Energy and
Acquisition with respect thereto. Although we have not independently
verified, and are not passing upon or assuming any responsibility for,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Proxy Statement or the Registration
Statement,
Wisconsin Energy Corporation
_____________________, 199___
Page 5
during the course of such participation no facts have come to our attention
which would lead us to believe that the Proxy Statement, at the date it was
first mailed to holders of ESELCO Common Stock and at the time of the ESELCO
Special Meeting, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or that the Registration Statement,
when it became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (except that we do
not express any belief with respect to the financial statements and other
financial and statistical information included or incorporated by reference
therein or omitted therefrom, or any information about, or supplied or
omitted by, Wisconsin Energy or Acquisition for use in the Proxy Statement or
the Registration Statement).
Each of the opinions as to enforceability of any agreement
or instrument is: (a) subject to the limitations set forth in the
General Qualifications stated in the Legal Opinion Accord of the ABA
Section of Business Law (1991), which General Qualifications are
attached hereto as Schedule 1; and (b) subject to the qualification
that certain provisions of such documents may be unenforceable in
whole or in part, but the inclusion of such provisions does not affect
the validity of any such documents as a whole and each of such
documents contains legally adequate provisions for the realization of
the principal legal rights and benefits afforded by it.
We are attorneys licensed to practice law in the State of
Nebraska. In rendering this opinion, we have relied as to certain
matters of Michigan law on an opinion of Xxxxxxxx Xxxxxx Xxxxxxxx and
Xxxx, a copy of which is attached hereto. Such opinion is
satisfactory to us in form and substance and, in our opinion, both you
and we are justified in relying thereon.
Wisconsin Energy Corporation
_____________________, 199___
Page 6
The opinions expressed herein are specifically limited to the present
internal Law of the State of Michigan and federal Law of the United States of
America, are given as of the date of this letter, are intended to apply only
to those facts and circumstances that exist as of the date hereof, and we
assume no obligation or responsibility to update or supplement this opinion
to reflect any facts or circumstances occurring after the date hereof that
would alter the opinions contained herein.
Whenever this opinion refers to matters within our
"knowledge" or "known to us," such reference is limited to facts
within our actual knowledge after inquiry of the attorneys who have
given substantive legal attention to the representation of the ESELCO
Companies and facts represented to us by officers of the ESELCO
Companies.
We call to your attention that Xx. Xxxx X. Xxxxxx, Esq., a
Partner in our firm, is a director and officer of ESELCO and Edison
Sault. We also call to your attention that the attorneys in our firm
who are actively representing the ESELCO Companies on matters relating
to the Reorganization Agreement, and other attorneys in our firm who
are known to those persons to own shares of ESELCO Common Stock,
collectively beneficially owned approximately ________ shares of
ESELCO Common Stock on the __________, 1997 record date for the ESELCO
Special Meeting, of which Xx. Xxxxxx owns _____ shares.
The opinions set forth above are delivered to you in
connection with the transactions described in the Reorganization
Agreement. This opinion letter is rendered solely for your
information and assistance in connection with such transactions
described in the Reorganization Agreement and may not be provided to,
or used or relied upon by, any other person or for any other purpose
without our prior written consent.
Very truly yours,
XXXXX XXXX
EXHIBIT 4
PLAN OF MERGER
OF
ESL ACQUISITION, INC.
INTO
ESELCO, INC.
THIS PLAN OF MERGER (the "Plan of Merger") is made as of
this ____ day of _________, 199____ by and between ESL ACQUISITION,
INC., a Michigan corporation ("Acquisition") and ESELCO, INC., a
Michigan corporation ("ESELCO").
RECITALS
WHEREAS, ESELCO, Acquisition and Wisconsin Energy
Corporation, a Wisconsin corporation ("Wisconsin Energy"), are parties
to an Amended and Restated Agreement and Plan of Reorganization, dated
as of May 13, 1997 as amended and restated on July 11, 1997 (the
"Reorganization Agreement"), providing for, among other things, the
merger of Acquisition with and into ESELCO (the "Merger");
WHEREAS, the respective Boards of Directors of ESELCO and
Acquisition have determined that the Merger is advisable, fair and in
the best interests of ESELCO and Acquisition and their respective
shareholders, and, by resolutions duly adopted, have approved the
Merger, the Reorganization Agreement, including this Plan of Merger,
and the transactions contemplated thereby;
WHEREAS, the shareholders of ESELCO and Acquisition, by
resolutions duly adopted, have approved the Merger, the Reorganization
Agreement, including this Plan of Merger, and the transactions
contemplated thereby; and
-1-
WHEREAS, Acquisition is a wholly owned subsidiary of
Wisconsin Energy and no approval of the Merger by the shareholders of
Wisconsin Energy is required by law or otherwise.
NOW, THEREFORE, in consideration of the Recitals and of the
mutual agreements and covenants set forth in this Plan of Merger and
for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, ESELCO and Acquisition hereby agree
as follows:
-2-
ARTICLE I
CORPORATE EXISTENCE OF THE SURVIVING CORPORATION
At the Effective Time of Merger, Acquisition shall be merged
with and into ESELCO which shall be the surviving corporation. The
corporate identity, existence, purposes, powers, franchises,
privileges, assets, properties and rights of ESELCO (hereinafter
sometimes referred to as the "Surviving Corporation") shall continue
unaffected and unimpaired by the Merger and the corporate identity,
existence, purposes, powers, franchises, privileges, assets,
properties and rights of Acquisition shall be merged into the
Surviving Corporation and the Surviving Corporation shall be fully
vested therewith. The separate existence of Acquisition, except
insofar as otherwise specifically provided by law, shall cease at the
Effective Time of Merger whereupon Acquisition and the Surviving
Corporation shall be and become one single corporation.
ARTICLE II
ARTICLES OF INCORPORATION OF SURVIVING CORPORATION
The Articles of Incorporation of ESELCO as in effect
immediately prior to the Effective Time of Merger shall be the
Articles of Incorporation of the Surviving Corporation until amended
in accordance with law.
ARTICLE III
BYLAWS OF SURVIVING CORPORATION
The Bylaws of ESELCO as in effect immediately prior to the
Effective Time of Merger shall be the Bylaws of the Surviving
Corporation until amended in accordance with law.
-3-
ARTICLE IV
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
The duly qualified and acting directors and officers of
Acquisition immediately prior to the Effective Time of Merger shall be
the directors and officers of the Surviving Corporation, to hold
office as provided in the Bylaws of the Surviving Corporation.
-4-
ARTICLE V
CONVERSION OF ESELCO STOCK
(a) At the Effective Time of Merger, and without any action
on the part of the holders thereof:
(i) Each share of Common Stock of ESELCO outstanding
at the Effective Time of Merger shall be converted into __________
shares of Common Stock of Wisconsin Energy on the terms and conditions
set forth in the Reorganization Agreement.
(ii) Any shares of capital stock of ESELCO that are
owned by ESELCO, Edison Sault Electric Company, ESEG, Inc. or Northern
Tree Service, Inc. at the Effective Time of Merger shall be cancelled
and retired and cease to exist and no Common Stock of Wisconsin Energy
or other consideration shall be issued or delivered in exchange
therefor.
(b) No fractional shares of Common Stock of Wisconsin
Energy shall be issued in the Merger. All fractional share interests
of a holder of more than one certificate representing shares of Common
Stock of Acquisition at the Effective Time of Merger shall be
aggregated. If a fractional share interest results after such
aggregation, each holder of a fractional share interest shall be paid
an amount in cash equal to the product obtained by multiplying such
fractional share interest by $_______.
(c) There are no shares of Preferred Stock of ESELCO issued
and outstanding and there will be no shares of Preferred Stock of
ESELCO issued and outstanding as of the Effective Time of Merger.
-5-
ARTICLE VI
CONVERSION OF ACQUISITION STOCK
At the Effective Time of Merger, and without any action on the part
of the holders thereof, each share of Common Stock of Acquisition outstanding
at the Effective Time of Merger shall be converted into one (1) share of
Common Stock of ESELCO on the terms and conditions set forth in the
Reorganization Agreement.
-6-
ARTICLE VII
EFFECT OF THE MERGER
At the Effective Time of Merger, the effect of the Merger
shall be as provided in the Michigan Business Corporation Act.
ARTICLE VIII
EFFECTIVE TIME OF MERGER
The Effective Time of Merger shall be ______________.
ARTICLE IX
CONDITIONS AND TERMINATION
The conditions specified in Articles VII and VIII of the
Reorganization Agreement shall constitute conditions precedent to the
obligations of ESELCO and Acquisition as therein provided and if by
reason of the provisions of Articles VII and VIII of the
Reorganization Agreement, either ESELCO or Acquisition is not
obligated to consummate the Merger contemplated by this Plan of
Merger, then the party not obligated may terminate this Plan of Merger
prior to the Effective Time of Merger by delivery to the other party
of written notice of termination prior to the Effective Time of
Merger, and thereupon this Plan of Merger shall be terminated without
further liability of either party in favor of the other except as
provided in the Reorganization Agreement.
ARTICLE X
REORGANIZATION
The parties intend that this Plan of Merger be a plan of
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and that the Merger be a tax free
reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended.
-7-
IN WITNESS WHEREOF, each of the parties hereto have caused
this Plan of Merger to be executed on its behalf on the day and year
first above written.
ESELCO, INC.
(Corporate Seal)
By:___________________________
Name: ____________________
Title: ___________________
Attest:
______________________________
Name: ________________________
Title: _______________________
ESL ACQUISITION, INC.
(Corporate Seal)
By: __________________________
Name: ____________________
Title: ___________________
Attest:
______________________________
Name: ________________________
Title: _______________________
-8-
EXHIBIT 5
WISCONSIN ENERGY CORPORATION
CLOSING CERTIFICATE
I, ______________, do hereby certify that:
1. I am the duly elected, qualified and acting __________
of Wisconsin Energy Corporation, a Wisconsin corporation ("Wisconsin
Energy").
2. I am familiar with the terms of the Amended and
Restated Agreement and Plan of Reorganization (the "Reorganization
Agreement"), dated as of May 13, 1997 as amended and restated on
July 11, 1997 by and among Wisconsin Energy, ESL Acquisition, Inc., a
Michigan corporation ("Acquisition") and ESELCO, Inc., a Michigan
corporation ("ESELCO").
3. I make this Certificate pursuant to the provisions of
Section 8.6(a) of the Reorganization Agreement with the intention that
it shall be relied upon by ESELCO.
4. Wisconsin Energy and Acquisition have performed and
complied in all material respects with all of their obligations under
the Reorganization Agreement which are to be performed or complied
with by them prior to or on the date hereof.
5. The representations and warranties made by Wisconsin
Energy and Acquisition in the Reorganization Agreement are true and
correct in all material respects as of the date hereof with the same
force and effect as though said representations and warranties had
been made on the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate in my
official capacity on this ____ day of ____________, 199___.
WISCONSIN ENERGY CORPORATION
By:____________________________
-1-
[LETTERHEAD]
EXHIBIT 6
________________, 199___
ESELCO, Inc.
Attention: Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxx. Xxxxx, Xxxxxxxx 00000
Gentlemen and Ladies:
We have acted as counsel for Wisconsin Energy Corporation, a
Wisconsin corporation ("Wisconsin Energy") and ESL Acquisition, Inc.,
a Michigan corporation ("Acquisition"), in connection with the
negotiation, preparation, execution and delivery of the Amended and
Restated Agreement and Plan of Reorganization, dated as of May 13,
1997 as amended and restated as of July 11, 1997 (the "Reorganization
Agreement"), by and among ESELCO, Inc. ("ESELCO"), Acquisition and
Wisconsin Energy, and the transactions contemplated thereby. We are
furnishing this opinion at the request of Wisconsin Energy and
Acquisition pursuant to Section 8.6(b) of the Reorganization
Agreement. Capitalized terms not otherwise defined herein have the
meanings assigned to them in the Reorganization Agreement.
In rendering this opinion, we have examined such corporate
records, certificates, instruments and other documents of Wisconsin
Energy and Acquisition, and questions and matters of law, as we have
considered necessary and appropriate for purposes of this opinion. In
giving the various opinions set forth below, we have, with respect to
factual matters, relied on certificates and similar documents
furnished by public officials and by officers of Wisconsin Energy and
Acquisition (which include a certification of Wisconsin Energy's and
Acquisition's officers of the accuracy of the representations and
warranties made by Wisconsin Energy and Acquisition in the
Reorganization Agreement).
ESELCO, Inc.
_______________, 199__
Page 2
We have assumed that: (i) all certificates of public officials
examined by us are accurate; (ii) each document submitted to us as an
original is authentic and complete; (iii) each document submitted to us as a
certified or photostatic copy conforms to an authentic original; (iv) each of
the parties (other than Wisconsin Energy and Acquisition) to the
Reorganization Agreement has duly and validly executed and delivered the
Reorganization Agreement; (v) all signatures (other than the signatures on
behalf of Wisconsin Energy and Acquisition) on documents reviewed by us are
genuine; (vi) each person executing the Reorganization Agreement (other than
on behalf of Wisconsin Energy or Acquisition) on behalf of such party is
authorized to do so; (vii) the obligations of each party (other than
Wisconsin Energy or Acquisition) under the Reorganization Agreement are such
party's legal, valid and binding obligations, enforceable in accordance with
the terms of the Reorganization Agreement; (viii) the Reorganization
Agreement accurately describes and contains the mutual understanding of the
parties; (ix) there are no oral or written statements or agreements that
purport to modify, amend or vary any of the terms of the Reorganization
Agreement; and (x) the certificates for Wisconsin Energy Common Stock to be
delivered pursuant to the Reorganization Agreement will (A) conform to the
specimen thereof examined by us (including the facsimile signatures of the
officers of Wisconsin Energy thereon) and (B) have been duly countersigned by
a transfer agent or assistant transfer agent and a registrar for the
Wisconsin Energy Common Stock in accordance with the resolutions of the Board
of Directors of Wisconsin Energy authorizing the issuance thereof.
Based upon the foregoing, and subject to the qualifications,
assumptions and limitations set forth herein, it is our opinion that:
-0-
XXXXXX, Inc.
_______________, 199__
Page 3
1. Wisconsin Energy is a corporation duly incorporated,
validly existing and in active status (meaning that it has filed its
most recent required annual report and has not filed articles of
dissolution) under the Laws of the State of Wisconsin, and has the
requisite corporate power and authority to carry on its business as
now being conducted.
2. Acquisition is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of Michigan,
and has the requisite corporate power and authority to carry on its
business as now being conducted.
3. Each of Wisconsin Energy and Acquisition has the
necessary corporate power and authority to enter into, execute and
deliver the Reorganization Agreement, to perform its obligations
thereunder and to consummate the transactions contemplated thereby.
4. The execution and delivery of the Reorganization
Agreement by each of Wisconsin Energy and Acquisition and the
consummation by Wisconsin Energy and Acquisition of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action on the part of Wisconsin Energy and Acquisition.
5. The Reorganization Agreement has been duly executed and
delivered by each of Wisconsin Energy and Acquisition and constitutes
a legal, valid and binding obligation of Wisconsin Energy and
Acquisition, enforceable against Wisconsin Energy and Acquisition in
accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws generally affecting the rights of creditors
and subject to general equity principles.
-3-
ESELCO, Inc.
_______________, 199__
Page 4
6. The execution and delivery of the Reorganization
Agreement by each of Wisconsin Energy and Acquisition do not, and the
performance of the Reorganization Agreement by Wisconsin Energy and
Acquisition will not, conflict with or violate: (a) the Restated
Articles of Incorporation or Bylaws of Wisconsin Energy or the
Articles of Incorporation or Bylaws of Acquisition; or (b) any
material federal, Wisconsin or Michigan state or local Law, rule,
regulation, order or governmental requirement applicable to Wisconsin
Energy or Acquisition or by which any of their respective properties
is bound or affected.
7. The shares of Wisconsin Energy Common Stock to be
issued pursuant to the Reorganization Agreement, as set forth in the
Reorganization Agreement, are duly authorized and, when issued as
contemplated by the Reorganization Agreement, will be validly issued,
fully paid and nonassessable (except as otherwise provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law, as
judicially interpreted).
8. The Registration Statement has become effective under
the Securities Act and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending under
the Securities Act.
9. The Registration Statement (excluding the financial
statements and other financial and statistical information included or
incorporated therein or omitted therefrom, and all information about,
or supplied or omitted by, the ESELCO Companies for use in the
Registration Statement, as to all of which we do not express any
opinion), at the time it became effective under the Securities Act,
complied as to form in all material respects with the requirements of
the Securities Act and the rules and regulations thereunder.
-4-
ESELCO, Inc.
_______________, 199__
Page 5
We have participated in the preparation and filing of the
Proxy Statement and the Registration Statement and, in the course of
such preparation, in conferences with certain officers and employees
of Wisconsin Energy and Acquisition and representatives of the ESELCO
Companies with respect thereto. Although we have not independently
verified, and are not passing upon or assuming any responsibility for,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Proxy Statement or the Registration
Statement, during the course of such participation no facts have come
to our attention which would lead us to believe that the Proxy
Statement, at the date it was first mailed to holders of ESELCO Common
Stock and at the time of the ESELCO Special Meeting, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or that the Registration Statement, when it
became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (except that
we do not express any belief with respect to the financial statements
and other financial and statistical information included or
incorporated by reference therein, or any information about, or
supplied by, ESELCO for use in the Proxy Statement or the Registration
Statement).
Each of the opinions as to enforceability of any agreement
or instrument is: (a) subject to the limitations set forth in the
General Qualifications stated in the Legal Opinion Accord of the ABA
Section of Business Law (1991), which General Qualifications are
attached hereto as Schedule 1; and (b) subject to the qualification
that certain provisions of such documents may be unenforceable in
whole or in part, but the inclusion of such provisions does not affect
the validity of any such documents as a whole and each of such
documents contains legally adequate provisions for the realization of
the principal legal rights and benefits afforded by it.
-5-
ESELCO, Inc.
_______________, 199__
Page 6
We are attorneys licensed to practice law in the States of
Wisconsin, Arizona and Florida. In rendering this opinion, we have
relied as to certain matters of Michigan law on an opinion of
______________ & __________, a copy of which is attached hereto. Such
opinion is satisfactory to us in form and substance and, in our
opinion, both you and we are justified in relying thereon. The
opinions expressed herein are specifically limited to the present
internal Law of the States of Michigan and Wisconsin and federal Law
of the United States of America, are given as of the date of this
letter, are intended to apply only to those facts and circumstances
that exist as of the date hereof, and we assume no obligation or
responsibility to update or supplement this opinion to reflect any
facts or circumstances occurring after the date hereof that would
alter the opinions contained herein.
Whenever this opinion refers to matters within our
"knowledge" or "known to us," such reference is limited to facts
within our actual knowledge after inquiry of the attorneys who have
given substantive legal attention to the representation of Wisconsin
Energy and Acquisition and facts represented to us by officers of
Wisconsin Energy and Acquisition.
We call to your attention that Xx. Xxxxx X. Xxxxxx, Esq., a
Partner in our Firm, is General Counsel of Wisconsin Energy and
certain of its Subsidiaries. We also call to your attention that
attorneys in our firm who are actively representing Wisconsin Energy
and Acquisition on matters relating to the Reorganization Agreement
collectively beneficially owned approximately ________ shares of
Wisconsin Energy Common Stock on the __________, 1997 record date for
the ESELCO Special Meeting.
-6-
ESELCO, Inc.
_______________, 199__
Page 7
The opinions set forth above are delivered to you in
connection with the transactions described in the Reorganization
Agreement. This opinion letter is rendered solely for your
information and assistance in connection with such transactions
described in the Reorganization Agreement and may not be provided to,
or used or relied upon by, any other person or for any other purpose
without our prior written consent.
Very truly yours,
XXXXXXX & XXXXX
-7-
ESELCO, Inc.
_______________, 199__
Page 1
DISCLOSURE SCHEDULE
This Disclosure Schedule, dated May 12, 1997, is the Disclosure
Schedule to be delivered by ESELCO, Inc. ("ESELCO") pursuant to the Agreement
and Plan of Reorganization dated as of May 13, 1997 by and among ESELCO,
Wisconsin Energy Corporation and ESL Acquisition, Inc. (the "Reorganization
Agreement"). The terms used in this Disclosure Schedule have the definitions
specified in the Reorganization Agreement.
Attached hereto are the disclosure statements as to the following
matters referenced in the following Sections of the Reorganization Agreement:
ITEM DESCRIPTION
---- ------------
1.31 Existing Indebtedness
1.32 Existing Insurance Policies
1.33 Existing Investments
1.34 Existing Liens
1.35 Existing Litigation
1.36 Existing Permits
1.37 Existing Plans
1.38 Existing Real Estate
1.51 Permitted Liens
3.15(c) Description Of Early Retirement Window Program
3.15(f) List of Persons at 45%
4.1(b) Corporate Power and Authority
4.2 Capitalization
4.7(c) Bank accounts and safekeeping arrangements
4.8(d) Declarations or payments of dividends since
December 31, 1996
-2-
4.10 List and Description of Existing Contracts
4.13 Certain Existing Insurance Policies
4.22 Certain Labor Matters
4.25 Certain Existing Permits
4.31 Description of certain Environmental Matters
4.32 Certain Accounts Matters
6.5(a) Description of certain Employment Matters
6.7 Certain Additional Indebtedness
9.5 List and Description of Expenses
ESELCO, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx,
President and Chief Executive Officer
Attest:
------------------------------------------
Xxxxxx X. Xxxxxx, Secretary
Receipt of an executed copy of the Disclosure Schedule is
hereby acknowledged on this 13th day of May, 1997.
-3-
WISCONSIN ENERGY CORPORATION
By:__________________________________
Xxxxxxx X. Xxxxx,
Chairman of the Board,
President and Chief
Executive Officer
Attest:
_____________________________________
Xxx Xxxxx Xxxxx, Secretary
-4-
