Document:

exh10_3.htm

 

Exhibit 10.3

 

ZBB ENERGY CORPORATION

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into on _________ ___, 2014, by and between Dilek Wagner (“you”) and ZBB Energy Corporation (“ZBB” or the “Company”).

 

RECITALS

 

WHEREAS, you are currently working in a consulting capacity for the Company, pursuant to the Agreement for Professional Services between you and the Company dated November 23, 2013 (the “Consulting Agreement”);

 

WHEREAS, the Company now desires to employ you in the position of Vice President of Finance; and

 

WHEREAS, you and the Company now desire to set forth the terms and conditions of your agreements and understandings in this Agreement, which shall replace and supersede all terms and conditions contained within the Consulting Agreement effective as of the date first written above.

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of you and the Company set forth below, you and the Company, intending to be legally bound, agree as follows:

 

1. Position.

 

(a) You will serve as the Company’s Vice President of Finance, reporting to the Company’s President and Chief Executive Officer (“CEO”).  It is the Company’s intent to provide a path to the CFO position.  The path will be defined within 60 days of the start date. Your services shall be performed primarily in Menomonee Falls, Wisconsin.  You acknowledge and agree, however, that you may be required to travel in connection with the performance of your job duties.

 

(b) Nothing in this Agreement will be construed as conferring upon you any right to remain employed by the Company or any of its subsidiaries or affiliates, or affect the right of the Company or any of its affiliates to terminate your employment at any time, for any reason or no reason, subject to the obligations contained in this Agreement.

 

2. Salary.

 

(a) You will be entitled to an annual salary of $160,000, payable in accordance with ZBB’s normal salaried payroll practices.  The CEO will review, at least annually, your overall compensation with a view to increasing it if, in the sole judgment of the CEO, the performance of ZBB or your services merit such an increase.

 

  

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(b) ZBB shall be entitled to withhold from amounts to be paid to you hereunder any federal, state or local withholding or other taxes or charges which it is required to withhold under applicable law.

 

3. Term.  This agreement shall remain in effect until terminated, by either party, at any time and for any reason, upon the provision of written notice to the other party, subject to the terms and conditions set forth in Section 8, below.

 

4. Options.  Effective as of the date of your full-time appointment, you will receive option awards. You will be granted an option to purchase 40,000 shares with an exercise price equal to the closing price of ZBB’s common stock on the NYSE Amex on the date of your full-time appointment as per the terms outlined in the 2010 Omnibus Long-Term Incentive Plan.

 

5. Incentive Compensation.  You shall be eligible to participate in various performance-based stock option and cash bonus plans offered by the Company, the terms of conditions of which shall be solely determined by the Company and approved by the Company’s compensation committee.

 

6. Commuting and Other Expenses.

 

(a) Expenses for other Company travel will be reimbursed in accordance with ZBB’s Employee Travel and Expense Policy.

 

7. Benefits.

 

(a) During the term of your employment by ZBB, ZBB will provide you with, and you will be eligible for, all benefits of employment generally made available to the senior executives of ZBB (collectively, the “Benefit Plans”), subject to and on a basis consistent with the terms, conditions and overall administration of such Benefit Plans.  You will be considered for participation in Benefit Plans which by the terms thereof are discretionary in nature (such as stock option plans) on the same basis as other executive personnel of ZBB of similar rank.  Notwithstanding the foregoing, you may elect either to participate in ZBB’s health Benefit Plan or obtain other health insurance.

 

(b) The Company will offer you four (4) weeks of personal time off per calendar year, in accordance with Company policy in effect from time to time.

 

8. Benefits Upon Termination.

 

(a) You will be entitled to a severance payment in an amount equal to four (4) months of your annual base salary as then in effect (“Severance Payments”) in the event (i) ZBB terminates your employment for any reason other than “Cause” or “Disability,” or (ii) you terminate your employment with ZBB for “Good Reason.”  You acknowledge and agree that the payment of the Severance Payments is contingent upon you executing a general release of claims for the benefit of ZBB (in a form satisfactory to ZBB), which must be executed by you (and any applicable revocation period must expire) in accordance with the terms of the general release of claims but in no event later than sixty (60) calendar days following the effective date of your termination.  The Severance Payments shall be payable in accordance with ZBB’s normal salaried payroll practices then in effect, and the first payment (which shall include any accrued payments that would have otherwise been made beginning on the date of your termination of employment) shall be made to you on the first normal payroll date that occurs at least five (5) business days after the expiration of the applicable revocation period for the general release of claims.

 

  

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You will also be entitled to all accrued and unpaid benefits under any Benefit Plans in which you participate through the date of termination.

 

(b) In the event your employment with ZBB is terminated due to “Disability,” you will be entitled to severance in an amount equal to three (3) months of your base salary as then in effect (“Disability Severance”), paid in accordance with ZBB’s normal salaried payroll practices, provided that you execute a general release of claims for the benefit of ZBB (in a form satisfactory to ZBB), which must be executed by you (and any applicable revocation period must expire) in accordance with the terms of the general release of claims but in no event later than sixty (60) calendar days following the effective date of your termination.  Your first Disability Severance payment (which shall include any accrued payments that would have otherwise been made beginning on the date of your termination of employment) shall be made to you on the first normal payroll date that occurs at least five (5) business days after the expiration of the applicable revocation period for the general release of claims.

 

You will also be entitled to all accrued and unpaid benefits under any Benefit Plans in which you participate through the date of termination.

 

(c) If (i) you terminate your employment with ZBB for “Good Reason” or if the Company terminates your employment without “Cause”; (ii) you are a participant in ZBB’s health Benefit Plan on the date your employment terminates; and (iii) if you elect to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) following such termination, then ZBB shall pay your monthly premium under COBRA until the earlier of:  (A) the last day of the six (6) month period following such termination or (B) the date on which you are offered or obtain health insurance coverage in connection with new employment or self-employment.

 

(d) If you terminate your employment with ZBB other than for “Good Reason” or ZBB terminates your employment for “Cause,” you will be entitled to the payment of any accrued but unpaid base salary through the date of termination, plus all accrued and unpaid benefits under any Benefit Plans in which you participate through the date of termination.  In either case, you will not be entitled to any Severance Payments, Disability Severance or payment of COBRA premiums.

 

(e) As a condition of your employment, you will be required to execute the Restrictive Covenant Agreement which is attached to this Agreement as Attachment A and incorporated herein.

 

(f) For purposes of this Agreement, “Cause” shall mean, as determined by the Company, termination of your employment with ZBB due to (i) any failure by you to substantially perform your duties with ZBB (other than by reason of illness) which occurs after ZBB has delivered to you a demand for performance which specifically identifies the manner in which ZBB believes you have failed to perform your duties, and you fail to resume performance of your duties on a continuous basis within fourteen (14) days after receiving such demand; (ii) your commission of a material violation of any law or regulation applicable to ZBB or any of its subsidiaries or your activities in respect of ZBB or any of its subsidiaries; (iii) your commission of any material act of dishonesty or disloyalty involving ZBB or any of its subsidiaries; (iv) any violation by you of a ZBB policy of material import; (v) any act by you of moral turpitude which is likely to result in discredit to or loss of business, reputation or goodwill of ZBB; (vi) your chronic absence from work other than by reason of a serious health condition; (vii) your commission of a crime which substantially relates to the circumstances of your position with ZBB or any of its subsidiaries or which has material adverse effect on ZBB or any of its subsidiaries; or (viii) the willful engaging by you in conduct which is demonstrably and materially injurious to ZBB or any of its subsidiaries.

 

  

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(g) For purposes of this Agreement, “Disability” shall mean (i) you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (ii) you have been, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under any accident, disability or health plan.

 

(h) For purposes of this Agreement, “Good Reason” shall mean your termination of your employment with ZBB within thirty (30) days after any of the following:  (i) a change in your position with ZBB which materially reduces your level of responsibility or a material reduction in your base salary (except to the extent the base salary of substantially all of the executive officers of ZBB is reduced proportionately); (ii) a notification by ZBB to you that your principal place of employment will be relocated to an office or location that is more than 50 miles from the office or location at which you were principally employed as of the date of this Agreement and that is no closer to your principal residence; or (iii) ]a material breach by ZBB of any term of this Agreement following written notice thereof and the failure of ZBB to cure such breach within ten (10) days of such written notice.  Notwithstanding the above to the contrary, Good Reason does not exist unless (A) you object to any change, reduction, notification, or breach described above by written notice to ZBB within ten (10) business days after such change, reduction, notification, or breach occurs and (B) ZBB fails to cure such change, reduction or breach within ten (10) business days after such notice is given.

 

(i) Any Severance Payments payable to you under this Agreement are intended to be exempt from Section 409A of the Code under the separation pay exemption pursuant to Treasury Regulation §1.409A-1(b)(9)(iii) and for such purpose, each Severance Payment to you under this under this Agreement shall be considered a separate payment.

 

  

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9. Timing; Miscellaneous Provisions.

 

(a) This Agreement and all your rights and obligations hereunder are personal to you and may not be transferred or assigned by you at any time.  ZBB can assign its rights under this Agreement to any entity that assumes ZBB’s obligations hereunder and this Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of ZBB’s business and/or assets.  For all purposes of this Agreement, the term “ZBB” shall include any successor to ZBB’s business and/or assets which becomes bound by this Agreement.

 

(b) This Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

 

(c) Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by overnight courier or U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of notices to you, notices shall be addressed to you at the home address which you most recently communicated to ZBB in writing.  In the case of notices to ZBB, notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

 

(d) No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by you and by an authorized officer of ZBB (other than you).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(e) This Agreement and the other agreements, representations and understandings expressly set forth or referenced herein contain the entire understanding of the parties with respect to the subject matter hereof.  With the exception of the terms and conditions of the Consulting Agreement, which shall be superseded and replaced by this Agreement, all other agreements between you and the Company shall remain in full force and effect.

 

(f) Any termination of this Agreement shall not release either ZBB or you from our respective obligations to the date of termination nor from the provisions of this Agreement which, by necessary or reasonable implication, are intended to apply after termination of this Agreement.

 

(g) The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Wisconsin (other than provisions governing the choice of law).

 

(h) The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

  

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(i) You acknowledge and agree that this Agreement is contingent upon your submission to and successful completion of a screening process which may include a background check, drug testing, and employment eligibility verification.  In the event that you do not successfully complete the screening process to the Company’s satisfaction, you acknowledge and agree that this Agreement shall be null and void, and that the Company shall have no further obligations under this Agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed, on one or more counterparts hereof, all of which counterparts shall be deemed as but one and the same document, as of the date first written above.

 

	
 

 

 

__________________________________________________

Dilek Wagner

	
ZBB ENERGY CORPORATION

 

By:    ___________________________________

Eric Apfelbach

President & Chief Executive Officer

Attachment – Restrictive Covenant Agreement

 

 

 

6Exhibit 4.1

 

CERTIFIED COPY

OF

SECURITIES RESOLUTION NO. 14

OF

WISCONSIN ELECTRIC POWER COMPANY

 

I, Keith H. Ecke, Assistant Corporate Secretary of WISCONSIN ELECTRIC POWER COMPANY (the “Company”), do hereby certify that the attached is a true and correct copy of Securities Resolution No. 14 under the Indenture dated as of December 1, 1995 between the Company and U.S. Bank National Association, as successor to Firstar Trust Company, as Trustee, which has been duly adopted by the Vice President and Treasurer of the Company pursuant to authorization delegated to him by the Board of Directors of the Company at a meeting duly called and held on December 5, 2013; that a quorum of said Board was present at said meetings and voted throughout; and I do further certify that said resolution has not been rescinded and remains in full force and effect.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said WISCONSIN ELECTRIC POWER COMPANY this 15th day of May, 2014.

 

 

	
 
    	
/s/   Keith H. Ecke
    
	
 
    	
Keith   H. Ecke
    
	
 
    	
Assistant   Corporate Secretary
    

(CORPORATE SEAL)

 

 

4.25% DEBENTURES DUE JUNE 1, 2044

 

SECURITIES RESOLUTION NO. 14

OF

WISCONSIN ELECTRIC POWER COMPANY

 

The actions described below are taken by the Board (as defined in the Indenture referred to below) of WISCONSIN ELECTRIC POWER COMPANY (the “Company”), or by an Officer or committee of Officers pursuant to Board delegation, pursuant to resolutions adopted by the Board of Directors of the Company as of December 5, 2013 and Section 2.01 of the Indenture dated as of December 1, 1995 (the “Indenture”) between the Company and U.S. Bank National Association (as successor to Firstar Trust Company), as Trustee.  Terms used herein and not defined have the same meaning as in the Indenture.

 

RESOLVED, that a new series of Securities is authorized as follows:

 

1.                                      The title of the series is 4.25% Debentures due June 1, 2044 (“4.25% Debentures”).

 

2.                                      The form of the 4.25% Debentures shall be substantially in the form of Exhibit 1 hereto.

 

3.                                      The 4.25% Debentures shall have the terms set forth in Exhibit 1.

 

4.                                      The 4.25% Debentures shall have such other terms as are set forth in Exhibit 2 hereto.

 

5.                                      The 4.25% Debentures shall be sold to the underwriter(s) named in the prospectus supplement dated May 12, 2014 on the following terms:

 

Aggregate Principal Amount:  $250,000,000

Price to Public:  99.376%

Underwriting Discount:  0.875%

Closing Date:  May 15, 2014

 

This Securities Resolution shall be effective as of May 12, 2014.

 

 

EXHIBIT 1

 

	
No.             
    	
 
    	
 
    	
$              
    

 

WISCONSIN ELECTRIC POWER COMPANY

4.25% Debentures due June 1, 2044

 

WISCONSIN ELECTRIC POWER COMPANY

 

promises to pay to                                                                         or registered assigns the principal sum of                               Dollars on June 1, 2044

 

	
Interest   Payment Dates:
    	
June 1   and December 1
    
	
Record   Dates:
    	
May 15   and November 15
    

 

 

	
 
    	
 
    	
Dated:
    
	
 
    	
 
    	
 
    
	
U.S.   BANK NATIONAL ASSOCIATION
    	
 
    	
WISCONSIN   ELECTRIC POWER COMPANY
    
	
Transfer   Agent and Paying Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Authenticated:
    	
 
    	
[Title   of Authorized Officer]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
U.S.   BANK NATIONAL ASSOCIATION
    	
 
    	
(CORPORATE   SEAL)
    
	
Registrar,   by
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Authorized   Signature
    	
 
    	
[Assistant]   Secretary
    

 

 

WISCONSIN ELECTRIC POWER COMPANY

4.25% Debentures due June 1, 2044

 

1.                                      Interest.

 

Wisconsin Electric Power Company (the “Company”), a Wisconsin corporation, promises to pay interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semiannually on June 1 and December 1 of each year commencing December 1, 2014.  Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 15, 2014.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

2.                                      Method of Payment.

 

The Company will pay interest on the Securities to the persons who are registered holders of Securities at the close of business on the record date for the next interest payment date, except as otherwise provided in the Indenture.  Holders must surrender Securities to a Paying Agent to collect principal payments.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  The Company may pay principal and interest by check payable in such money.  It may mail an interest check to a holder’s registered address.

 

3.                                      Securities Agents.

 

Initially, U.S. Bank National Association will act as Paying Agent, Transfer Agent and Registrar.  The Company may change any Paying Agent or Transfer Agent without notice.  The Company or any Affiliate may act in any such capacity.  Subject to certain conditions, the Company may change the Trustee.

 

4.                                      Indenture.

 

The Company issued the securities of this series (the “Securities”) under an Indenture dated as of December 1, 1995 (the “Indenture”) between the Company and U.S. Bank National Association (as successor to Firstar Trust Company) (the “Trustee”).  The terms of the Securities include those stated in the Indenture and in the Securities Resolution establishing the Securities and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb).  Securityholders are referred to the Indenture, the Securities Resolution and such Act for a statement of such terms.

 

5.                                      Redemption.

 

At any time prior to December 1, 2043, the Securities will be redeemable in whole or in part from time to time, at the Company’s option, at a “make-whole” redemption price equal to the greater of (a) 100% of the principal amount of the Securities being redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-

 

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day months) at the Treasury Rate applicable to the Securities plus 15 basis points, plus accrued interest to, but not including, the redemption date.  At any time on or after December 1, 2043, the Company may redeem the Securities, in whole or in part from time to time, at 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest to, but not including, the redemption date.

 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Securities being redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Securities.

 

“Comparable Treasury Price” means, with respect to any redemption date, (a) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp., Goldman, Sachs & Co. and RBC Capital Markets, LLC, their respective successors, and two other primary U.S. government securities dealers in the City of New York, New York (a “Primary Treasury Dealer”) selected by the Company.  If any Reference Treasury Dealer shall cease to be a Primary Treasury Dealer, the Company will select another Primary Treasury Dealer which will be substituted for that dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third business day preceding such redemption date.

 

“Treasury Rate” means with respect to any redemption date, the rate per year equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date; provided that, if the Reference Treasury Dealers shall determine that there is no such Comparable Treasury Issue, such rate per year shall be equal to the estimated semiannual equivalent yield to maturity that a United States Treasury security having a maturity comparable to the remaining term of the Securities to be redeemed would bear, if such security were available, such estimate to be made by the Reference Treasury Dealers on the basis of interpolation, extrapolation and other

 

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accepted financial practices, taking into account (a) the yields to maturity of United States Treasury securities of other maturities, (b) yields to maturity of other U.S. dollar denominated debt securities having a maturity comparable to the remaining term of the Securities to be redeemed and (c) applicable interest rate spreads between United States Treasury securities and such other debt securities, all as of 5:00 p.m., New York City time, on the third business day preceding such redemption date.

 

Procedures for the redemption of the Securities will be governed by Article 3 of the Indenture.

 

6.                                      Denominations, Transfer, Exchange.

 

The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000.  The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture.  The Transfer Agent may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or the Indenture.  The Transfer Agent need not exchange or register the transfer of any Security or portion of a Security selected for redemption.  Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed.

 

7.                                      Persons Deemed Owners.

 

The registered holder of a Security may be treated as its owner for all purposes.

 

8.                                      Amendments and Waivers.

 

Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a majority in principal amount of the securities of all series affected by the amendment.  Subject to certain exceptions, a default on a series may be waived with the consent of the holders of a majority in principal amount of the series.

 

Without the consent of any Securityholder, the Indenture or the Securities may be amended, among other things, to cure any ambiguity, omission, defect or inconsistency; to provide for assumption of Company obligations to Securityholders; or to make any change that does not materially adversely affect the rights of any Securityholder.

 

9.                                      Restrictive Covenants.

 

The Securities are unsecured general obligations of the Company initially limited to $250,000,000 principal amount.  The Company may from time to time without notice to, or the consent of, the holders of the Securities, create and issue further securities of the same series, equal in rank to the Securities in all respects (or in all respects except for the payment of interest accruing prior to the issue date of the new securities or except for the first payment of interest following the issue date of the new securities) so that the new securities may be consolidated and form a single series with the Securities and have the same terms as to status, redemption or otherwise as the Securities. The Indenture does not limit other unsecured debt.  Section 4.07 of the Indenture, which if applicable limits

 

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certain mortgages and other liens, will apply with respect to the Securities.  The limitations are subject to a number of important qualifications and exceptions.

 

10.                               Successors.

 

When a successor assumes all the obligations of the Company under the Securities and the Indenture, the Company will be released from those obligations.

 

11.                               Defeasance Prior to Redemption or Maturity.

 

Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity.  U.S. Government Obligations are securities backed by the full faith and credit of the United States of America which are not callable at the issuer’s option or certificates representing an ownership interest in such Obligations.

 

12.                               Defaults and Remedies.

 

An Event of Default includes: default for 60 days in payment of interest on the Securities; default in payment of principal on the Securities; default for 60 days in the payment of any sinking fund obligation with respect to the Securities; default by the Company for a specified period after notice to it in the performance of any of its other agreements applicable to the Securities; certain events of bankruptcy or insolvency; and any other Event of Default provided for in the series.  If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare the principal of all the Securities to be due and payable immediately.

 

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities.  Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests.  The Company must furnish an annual compliance certificate to the Trustee.

 

13.                               Trustee Dealings with Company.

 

U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with those persons, as if it were not Trustee.

 

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14.                               No Recourse Against Others.

 

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

 

15.                               Authentication.

 

This Security shall not be valid until authenticated by a manual signature of the Registrar.

 

16.                               Abbreviations.

 

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to Minors Act), and U/T/M/A (=Uniform Transfers to Minors Act).

 

The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture and the Securities Resolution, which contains the text of this Security in larger type.  Requests may be made to:  Corporate Secretary, Wisconsin Electric Power Company, 231 West Michigan Street, P.O. Box 2046, Milwaukee, WI 53201.

 

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EXHIBIT 2

 

4.25% Debentures due June 1, 2044

 

Supplemental Terms

 

In addition to the terms set forth in Exhibit 1 to Securities Resolution No. 14, the 4.25% Debentures shall have the following terms:

 

Section 1. Definitions.  Capitalized terms used and not defined herein shall have the meaning given such terms in the Indenture.  The following is an additional definition applicable to the 4.25% Debentures:

 

“Depositary” means, with respect to the 4.25% Debentures, issued as one or more global Securities, The Depository Trust Company, New York, New York, or any successor thereto registered under the Securities Exchange Act of 1934 or other applicable statute or regulation.

 

Section 2. Securities Issuable as Global Securities.

 

(a)  The 4.25% Debentures shall be issued in the form of one or more permanent global Securities and shall, except as otherwise provided in this Section 2, be registered only in the name of the Depositary or its nominee.  Each global Security shall bear a legend substantially to the following effect:

 

“Unless this certificate is presented by an authorized representative of The Depository Trust Company, a limited-purpose trust company organized under the New York Banking Law (“DTC”), to the Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.”

 

(b)  If at any time (i) the Depositary with respect to the 4.25% Debentures notifies the Company that it is unwilling or unable to continue as Depositary for such global Security or (ii) the Depositary for the 4.25% Debentures shall no longer be eligible or in good standing under the Securities Exchange Act of 1934 or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to such global Security.  If a successor Depositary for such global Security is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Transfer Agent shall register the exchange of such global Security for an equal principal amount of Registered Securities in the manner provided in Section 2.07 of the Indenture.

 

 

(c)  The Transfer Agent shall register the transfer or exchange of a global Security for Registered Securities pursuant to Section 2.07 of the Indenture if (i) a Default or Event of Default shall have occurred and be continuing with respect to the 4.25% Debentures, or (ii) the Company determines that the 4.25% Debentures shall no longer be represented by global Securities.

 

(d)  In any exchange provided for in the preceding paragraphs (b) or (c), the Company will execute and the Registrar will authenticate and deliver Registered Securities.  Registered Securities issued in exchange for a global Security shall be in such names and denominations as the Depositary for such global Security shall instruct the Registrar.  The Registrar shall deliver such Registered Securities to the persons in whose names such Securities are so registered.

 

(e)  The 4.25% Debentures will trade in the Depositary’s Same-Day Funds Settlement System.  All payments of principal and interest on global Securities will be made by the Company in immediately available funds.

 

2

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