WPS RESOURCES CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION AND DEFERRED STOCK UNIT PLAN


As Amended and Restated Effective January 1, 2001

 

 



 

 


WPS RESOURCES CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION AND DEFERRED STOCK UNIT PLAN


        The WPS Resources Corporation Non-Employee Director Deferred Compensation and
Deferred Stock Unit Plan (the "Plan") has been adopted to promote the
best interests of WPS Resources Corporation (the "Company") and the
stockholders of the Company by attracting and retaining well-qualified persons
for service as non-employee directors of the Company and designated subsidiaries
and affiliates. The Plan constitutes an amendment and restatement of the portion
of the WPS Resources Corporation Deferred Compensation Plan that was applicable
to non-employee directors.

        The Plan, as hereby adopted, is subject to shareholder approval at the 2001
annual meeting of shareholders of the Company. In the event that shareholder
approval is not obtained, the portion of the WPS Resources Corporation Deferred
Compensation Plan applicable to non-employee directors, as in effect on December
31, 2000, shall continue.


 

ARTICLE I. DEFINITIONS AND CONSTRUCTION


     Section  1.01.
Definitions.


        The following terms have the meanings indicated below unless the context in
which the term is used clearly indicates otherwise:

        (a) Account: The record keeping account or accounts maintained to record the
interest of each Director under the Plan. An Account is established for record
keeping purposes only and not to reflect the physical segregation of assets on
the Director's behalf, and may consist of such subaccounts or balances as the
Committee may determine to be necessary or appropriate.


            (i) Deferral Account: The portion of a Director's Account to
            which is credited the Director's Deferrals and deemed investment
            gain or loss in accordance with Article II hereof (including,
            without limitation, the Director's interest in Reserve Account A,
            Reserve Account B and the WPS Stock Account).

            (ii) Deferred Stock Unit Account: The portion of a Director's
            Account to which is credited the Director's interest in the Deferred
            Stock Unit feature of the Plan described in Article III hereof.



        (b) Act: The Securities Act of 1933, as interpreted by regulations and rules
issued pursuant thereto, all as amended and in effect from time to time. Any
reference to a specific provision of the Act shall be deemed to include
reference to any successor provision thereto.

        (c) Available Investment Option: See Section 2.05(a).

        (d) Beneficiary: The person or entity designated by a Director to be his
beneficiary for purposes of this Plan. If a Director designates his spouse as a
beneficiary, such beneficiary designation automatically shall become null and
void on the date of the Director's divorce or legal separation from such spouse.
If a valid designation of Beneficiary is not in effect at time of the Director's
death, the estate of the Director is deemed to be the sole Beneficiary. If a
Beneficiary dies while entitled to receive distributions from the Plan, any
remaining payments shall be paid to the estate of the Beneficiary. Beneficiary
designations shall be in writing, filed with the Committee, and in such form as
the Committee may prescribe for this purpose.

        (e) Board: The Board of Directors of the Company.

        (f) Code: The Internal Revenue Code of 1986, as interpreted by regulations
and rulings issued pursuant thereto, all as amended and in effect from time to
time. Any reference to a specific provision of the Code shall be deemed to
include reference to any successor provision thereto.

        (g) Committee: The Compensation and Nominating Committee of the Board.

        (h) Company: WPS Resources Corporation, or any successor corporation.

        (i) Deferral: An amount credited, in accordance with a Director's election,
to the Director's Deferral Account under the Plan in lieu of the current payment
of an equal amount of the Director Fees as cash compensation to the Director.

        (j) Director: A non-employee member of the Board or a non-employee member of
the board of directors of a subsidiary or affiliate of the Company who is
designated for participation by the Board.

        (k) Director Fees: Those fees, other than fees designated for the Deferred
Stock Unit feature of the Plan, payable to a Director for services rendered on
the Board (including attendance fees and fees for serving as a committee chair)
or for service on the board of directors of a subsidiary or affiliate of the
Company.

        (l) ERISA: The Employee Retirement Income Security Act of 1974, as
interpreted by regulations and rulings issued pursuant thereto, all as amended
and in effect from time to time. Any reference to a specific provision of ERISA
shall be deemed to include reference to any successor provision thereto.

        (m) Exchange Act: The Securities Exchange Act of 1934, as interpreted by
regulations and rules issued pursuant thereto, all as amended and in effect from
time to time. Any reference to a specific provision of the Exchange Act shall be
deemed to include reference to any successor provision thereto.

        (n) Investment Period: See Section 2.05(c).

        (o) Investment Options: The hypothetical investment accounts described in
Article II and such other investment options as the Committee may from time to
time determine (which may, but need not, be based upon one or more of the
investment options available under the Wisconsin Public Service Corporation
Administrative Employees Savings Plan).

        (p) Stock Unit Accounts: The WPS Stock Account described in Section 2.04 and
the Deferred Stock Unit Account described in Section 3.02.

        (q) Trust: The WPS Resources Corporation Deferred Compensation Trust or other
funding vehicle which may from time to time be established, as amended and in
effect from time to time.

        (r) WPS Resources Stock: The common stock, $1.00 par value, of the Company.

        (s) WPS Resources Stock Units: The hypothetical shares of WPS Resources
Stock, that are credited to the WPS Stock Account and the Deferred Stock Unit
Account in accordance with Sections 2.04 and 3.02, respectively.

    

Section 1.02.
Construction and Applicable Law.


        (a) Wherever any words are used in the masculine, they shall be construed as
though they were used in the feminine in all cases where they would so apply;
and wherever any words are use in the singular or the plural, they shall be
construed as though they were used in the plural or the singular, as the case
may be, in all cases where they would so apply. Titles of articles and sections
are for general information only, and the Plan is not to be construed by
reference to such items.

        (b) The Plan is to be construed and its validity determined according to the
laws of the State of Wisconsin to the extent such laws are not preempted by
federal law. In case any provision of the Plan is held illegal or invalid for
any reason, the illegality or invalidity will not affect the remaining parts of
the Plan, but the Plan shall, to the extent possible, be construed and enforced
as if the illegal or invalid provision had never been inserted.


 

ARTICLE II. DEFERRAL OF DIRECTOR FEES


     Section  2.01.
Deferrals Of Director Fees.


        (a) Initial Deferral Election. A Director may elect, in such form and
manner as the Committee may prescribe, to defer payment of all or a portion of
the Director Fees that would otherwise be paid to the Director. A Director's
election shall specify the percentage (in increments of 1% to a maximum of 100%
or such lesser amount or percentage as may be established by the Committee) of
the Director Fees that the Director wishes to defer. A validly executed election
shall become effective with respect to Director Fees earned by the Director on
and after the date on which the Director's deferral election is received and
accepted by the Committee, or as soon thereafter as practicable. A Director's
deferral election, once effective, shall remain in effect until modified by the
Director in accordance with subsection (b) below or otherwise revoked in
accordance with Plan rules.

        (b) Revised Deferral Election. A Director may modify his then current
deferral election by filing a revised election form, properly completed and
signed, with the Committee. A validly executed revised election will be
effective with respect to Director Fees earned by the Director on and after the
date on which the Director's revised deferral election is received and accepted
by the Committee, or as soon thereafter as practicable. A Director's revised
deferral election, once effective, shall remain in effect until again modified
by the Director in accordance with this subsection (b) or otherwise revoked in
accordance with Plan rules.

    

Section 2.02.
Reserve Account A.


        (a) Limited Purpose Account. Reserve Account A is limited compensation
deferred by a Director prior to January 1, 1996, together with attributed
earnings on such deferrals through December 31, 2000. Except for attributed
earnings as described below, no further deferrals, contributions or credits of
any kind will be made to this account on behalf of a Director.

        (b) Crediting of Interest Equivalent. As of the end of each Plan Year,
Reserve Account A will be credited with an interest equivalent on the balance in
the account from time to time during the year. The annual interest equivalent
will be the sum (on a non-compounded basis) of the attributed earnings for each
month during the year based on the account balance as of the last day of the
month. Unless modified by the Committee, the interest equivalent rate for any
month will be the greater of:


            (i) one-half of one percent (0.5%); or

            (ii) one-twelfth (1/12) of the consolidated return on common
            shareholders' equity of the Company and all consolidated
            subsidiaries (ROE). For the months of April through September, ROE
            means the consolidated return on equity of the Company and all
            consolidated subsidiaries for the twelve (12) months ended on the
            preceding March 31 as calculated pursuant to the Company's standard
            accounting procedure for financial reporting to shareholders. For
            the months October through March, ROE means return on equity as
            described above for the twelve (12) months ended on the preceding
            September 30.



        (c) Revised Rate. Subject to Article VI, the Committee may revise the
interest equivalent rate or the manner in which it is calculated, but in no
event shall the rate be less than six percent (6%) per annum. Any such revised
rate shall be effective with the calendar month following such action by the
Committee.

    

Section 2.03.
Reserve Account B.


        (a) Availability. Reserve Account B is an Available Investment Option
with respect to the deemed investment of a Director's Deferrals. It is credited
with earnings equivalent based upon a percentage of the Company's return on
equity for the year.

        (b) Crediting of Interest Equivalent. As of the end of each calendar
quarter, the account will be credited with an interest equivalent on the balance
in the account from time to time during the year. The quarterly interest
equivalent will be the sum (on a non-compounded basis) of the attributed
earnings for each month during the quarter based on the account balance as of
the last day of each month. Unless modified by the Committee, the interest
equivalent rate for any month will be the greater of:


            (i) one-half of one percent (0.5%); or

            (ii) seventy percent (70%) of one-twelfth (1/12) of the
            consolidated return on common shareholders equity of the Company and
            all consolidated subsidiaries (ROE). For the months of April through
            September, ROE means the consolidated return on equity of the
            Company and all consolidated subsidiaries for the twelve (12) months
            ended on the preceding March 31 as calculated pursuant to the
            Company's standard accounting procedure for financial reporting to
            shareholders. For the months October through March, ROE means return
            on equity as described above for the twelve (12) months ended on the
            preceding September 30.



        (c) Revised Rate. Subject to Article VI, the Committee may revise the
interest equivalent rate or the manner in which it is calculated, but in no
event shall the rate be less than six percent (6%) per annum. Any such revised
rate shall be effective with the calendar month following such action by the
Committee.

    

Section 2.04.
WPS Stock Account.


        (a) Availability. The WPS Stock Account is an Available Investment
Option with respect to the deemed investment of a Director's Deferrals.

        (b) Conversion to WPS Stock Units. As of the end of each month, all
Deferrals made by or on behalf of a Director during that month and allocated to
the WPS Stock Account (the "Convertible Amount") are converted, for
record keeping purposes, into whole and fractional WPS Resources Stock Units,
with fractional units calculated to four decimal places. The conversion shall be
accomplished by dividing each Director's Convertible Amount by the average
purchase price of all shares of WPS Resources Stock purchased during that month
by or on behalf of the Trust and the WPS Resources Corporation Stock Investment
Plan. Likewise, any dividends that would have been payable on the WPS Resources
Stock Units credited to a Director's WPS Stock Account had such Units been
actual shares of WPS Resources Stock shall be converted, for record keeping
purposes, into whole and fractional WPS Resources Stock Units based on the
average purchase price of all shares of WPS Resources Stock purchased by or on
behalf of the Trust and the WPS Resources Corporation Stock Investment Plan
during the month in which the dividend is paid. Notwithstanding the foregoing,
if for any month there are no open-market purchases by or on behalf of the Trust
and the WPS Resources Corporation Stock Investment Plan, the conversion shall be
accomplished based upon the closing price of a share of WPS Resources Stock on
the last date on the applicable month on which a share of WPS Resources Stock
was traded, as reported in the Wall Street Journal's New York Stock Exchange
Composite Transaction listing.

        (c) Conversion from WPS Stock Units. If a Director elects under
Section 2.05(d) to reallocate all or any portion of his WPS Stock Account
among the other Available Investment Options, the WPS Resources Stock Units to
which such election relates shall be converted, for record keeping purposes,
into an amount equal to the product of such units and the closing price of a
share of WPS Resources Stock on the most recent date prior to the effective date
of such reallocation on which a share of WPS Resources Stock was traded, as
reported in the Wall Street Journal's New York Stock Exchange Composite
Transaction listing.

    

Section 2.05.
Hypothetical Investment of Director Deferrals.


        (a) Available Investment Options. For purposes of directing the deemed
investment of a Director's Deferrals under subsection (b) below and for purposes
of reallocating the deemed investment of the Director's Deferral Account under
subsection (d) below, the Available Investment Options shall be all of the
Investment Options other than Reserve Account A.

        (b) Deemed Investment of Director Deferrals. In accordance with
uniform rules prescribed by the Committee, each Director shall designate, in
writing or in such other manner as the Committee may prescribe, how Deferrals
made while the designation is in effect are credited among the Available
Investment Options. When selecting more than one Available Investment Option,
the Director shall designate, in whole multiples of 10% or such other percentage
determined by the Committee, the percentage of his or her Deferrals to be
credited to each Available Investment Option. If the Director fails to make a
timely and complete investment designation, he or she shall be deemed to have
elected that 100% of his or her Deferrals be credited to Reserve Account B or
such other of the Available Investment Options specified by the Committee for
this purpose. A Director's election or deemed election shall become effective
with respect to Deferrals credited to the Director's Deferral Account on and
after the date on which the Director's election is received and accepted by the
Committee, and shall remain in effect unless and until modified by a subsequent
election that becomes effective in accordance with the rules of this subsection.

        (c) Allocation of Deemed Investment Gain or Loss. On a quarterly basis
or such other basis as the Committee may prescribe (the "Investment
Period"), the Deferral Account of each Director will be credited (or
charged) based upon the investment gain (or loss) that the Director would have
realized with respect to his or her Deferral Account had the Account been
invested in accordance with the terms of the Plan and where applicable, the
Director's written election. Subject to the special rules set forth in this
Article II with respect to Reserve Account A, Reserve Account B and the WPS
Stock Account, the credit (or charge) shall be the sum, separately calculated
for each of the Investment Options, of the product obtained by multiplying (i)
the portion (if any) of the Director's Deferral Account as of the first day of
the Investment Period that is deemed to have been invested in each Investment
Option, and (ii) the rate of return experienced by that Investment Option during
the Investment Period. The Committee, in its discretion, may prescribe alternate
rules for the valuation of Participant Accounts, including, without limitation,
the application of unit accounting principles.

        (d) Reallocation of Account. Subject to subsection (e) below, and in
accordance with rules prescribed by the Committee, each Director may elect to
reallocate his or her Deferral Account (other than the portion deemed to be
invested in Reserve Account A) among the Available Investment Options. When
selecting more than one Investment Option, the Director shall designate, in
whole multiples of 10% or such other percentage determined by the Committee, the
percentage of his or her Deferral Account (other than the portion deemed to be
invested in Reserve Account A) that is deemed to be invested in each Available
Investment Option after the investment reallocation is given effect. A
Director's reallocation election made in any Investment Period shall become
effective on the first day of the next Investment Period, or as soon thereafter
as is practicable, and shall remain in effect unless and until modified by a
subsequent election that becomes effective in accordance with the rules of this
subsection. Other than a reallocation of a Director's Deferral Account pursuant
to a revised investment election submitted by the Director, the deemed
investment allocation of a Director will not be adjusted to reflect differences
in the relative investment return realized by the various hypothetical
Investment Options that the Director has designated.

        (e) Securities Law Restrictions. Notwithstanding anything to the
contrary herein, all elections under subsection (d) above by a Director who is
subject to Section 16 of the Exchange Act are subject to review by the Committee
prior to implementation. Further, the following reallocation transactions under
subsection (d) above by a Director who is subject to Section 16 of the Exchange
Act are prohibited: (i) elections to reallocate the deemed investment of the
affected Director's Account into WPS Resources Stock Units within six (6) months
of an election to reallocate deemed investments out of WPS Resources Stock
Units; and (ii) elections to reallocate the deemed investment of the affected
Director's Account out of WPS Resources Stock Units within six (6) months of an
election to reallocate deemed investments into WPS Resources Stock Units
(collectively, "Prohibited Transactions"). All Prohibited Transactions
are void. In accordance with Section 7.02, the Committee may restrict additional
transactions, or impose other rules and procedures, to the extent deemed
desirable by the Committee in order to comply with the Exchange Act.

        (f) The foregoing provisions of this Section shall be effective on the first
day of the month coincident with or next following the date on which
shareholders of the Company approve the Plan as hereby amended and restated, or
as soon thereafter as is practicable. Prior to implementation of the terms and
conditions of this Section, a Participant's Account shall be credited with
hypothetical investment gain or loss in accordance with the terms of the Plan as
in effect on December 31, 2000.

    

Section 2.06.
Accounts are For Record Keeping Purposes Only.


        Plan Accounts and the record keeping procedures described herein serve solely
as a device for determining the amount of benefits accumulated by a Director
under the Plan, and shall not constitute or imply an obligation on the part of
the Company to fund such benefits. In any event, the Company may, in its
discretion, set aside assets equal to part or all of such Account balances and
invest such assets in WPS Resources Stock, life insurance or any other
investment deemed appropriate. Any such assets, including WPS Resources Stock
and any other assets held under the Trust, shall be and remain the sole property
of the Company and except to the extent that the Trust authorizes a Director to
direct the trustee with respect to the voting of WPS Resources Stock held in the
Trust, a Director shall have no proprietary rights of any nature whatsoever with
respect to such assets.


 

ARTICLE III. DEFERRED STOCK UNITS


     Section  3.01.
Deferred Stock Units.


        The Board may from time to time direct that a portion of the remuneration to
be earned by a Director for service on the Board shall be credited under this
Plan in the form of Deferred Stock Units. Any such direction shall be effective
with respect to remuneration to be earned by the Director on and after the
effective date of such direction, and shall continue in effect until modified or
revoked by a subsequent direction of the Board. The Board's direction may
provide either for the direct credit of Deferred Stock Units or for the
mandatory deferral of a prescribed amount of cash remuneration that will be
converted into WPS Stock Units in accordance with Section 3.02(b) below.

    

Section 3.02.
Deferred Stock Unit Account.


        (a) Limited Purpose "Buy Only" Account. A Director's
Deferred Stock Unit Account is a "buy only" account limited to
Deferred Stock Units allocated to the Director in accordance with Section 3.01
above. The Director is not able to exercise investment discretion with respect
to his Deferred Stock Unit Account.

        (b) Conversion to WPS Stock Units. As of the end of each month, all
deferrals directed by the Board during that month in accordance with Section
3.01 above shall be credited to the Director's Deferred Stock Unit Account. If
the Board directs that a Director be credited with a prescribed number of WPS
Resources Stock Units, the number of units so prescribed shall be credited to
the Director's Deferred Stock Unit Account. If the Board directs that a Director
be credited with WPS Resources Stock Units with a prescribed value, the value to
be credited (the "Deferred Stock Unit Convertible Amount") will be
converted, for record keeping purposes, into whole and fractional WPS Resources
Stock Units, with fractional units calculated to four decimal places. The
conversion shall be accomplished by dividing each Director's Deferred Stock Unit
Convertible Amount by the average purchase price of all shares of WPS Resources
Stock purchased during that month by or on behalf of the Trust and the WPS
Resources Corporation Stock Investment Plan. Any dividends that would have been
payable on the WPS Resources Stock Units credited to a Director's Deferred Stock
Unit Account had such Units been actual shares of WPS Resources Stock shall be
converted, for record keeping purposes, into whole and fractional WPS Resources
Stock Units based on the average purchase price of all shares of WPS Resources
Stock purchased by or on behalf of the Trust and the WPS Resources Corporation
Stock Investment Plan during the month in which the dividend is paid.


 

ARTICLE IV. DISTRIBUTION OF ACCOUNTS


     Section  4.01.
Distribution Election.


        (a) Election. A Director, at the time he commences participation in
the Plan, shall make a distribution election with respect to his Account. The
election shall be in such form as the Committee may prescribe, and shall specify
the distribution commencement date, the distribution period, and the
distribution method applicable following the Director's death. Any such election
shall be consistent with the following rules (or where the Director fails to
make a selection, in accordance with the default rules set forth below):


            (i) Distribution Commencement Date. Unless the Director
            has selected a later commencement date (which in no event shall be
            later than the first distribution period following the Director's
            attainment of age 72), distribution of a Director's Account will
            commence within 60 days following the end of the calendar year in
            which occurs the Director's termination of service on the Board or,
            where applicable, termination of service on the board of a
            subsidiary or affiliate of the Company.

            (ii) Distribution Period. Distributions will be made in 1
            to 15 annual installments, as elected by the Director.

            (iii) Distribution of Remaining Account Following Director's
            Death. In the event of the Director's death, the Director's
            remaining undistributed interest will be distributed to the
            Beneficiary designated by the Director in either a single sum
            payment or in installments, as elected by the Director. If the
            Director has elected that death benefits be paid in a single sum,
            the payment shall be made no later than March 1 following the
            calendar year in which occurs the Director's death. If the Director
            has elected that death benefits be paid in installments, (A) any
            installments previously commenced to the Director shall continue to
            the Beneficiary and (B) if installment distributions had not
            commenced as of the date of the Director's death, payments over the
            installment period elected by the Director shall commence to the
            Beneficiary no later than March 1 following the calendar year in
            which occurs the Director's death.



        (b) Effectiveness of Election. A distribution election shall be deemed
made only when it is received and accepted as complete by the Committee, and
shall remain in effect until modified by the Director in accordance with Section
4.02 below or otherwise revoked in accordance with Plan rules.

    

Section 4.02.
Modified Distribution Election.


        A Director may from time to time modify his distribution election by filing a
revised distribution election, properly completed and signed, with the
Committee. However, a revised distribution election will be given effect only if
the Director remains an active member of the Board for twelve (12) consecutive
months following the date that the revised election is received and accepted as
complete by the Committee.

    

Section 4.03.
Calculation of Annual Distribution Amount.


        (a) Pre-2001 Retirees. For any Director whose retirement date is or
who terminates service prior to January 1, 2001, distribution of the Director's
Account will be calculated and made under the distribution provisions of the WPS
Resources Corporation Deferred Compensation Plan applicable to the Director on
the date of the Director's retirement or termination of service.

        (b) Post-2000 Retirees. For a Director who retires or terminates
service after December 31, 2000, the annual distribution amount, unless the
Committee specifies a different or alternate method, shall be calculated as
follows:


            (i) The annual distribution amount for the Director's Account,
            other than the portion of the Account that is deemed to be invested
            in the Stock Unit Accounts (the "Distributable Account")
            shall be determined by dividing (A) the aggregate balance in the
            Distributable Account as of January 1 of the year for which the
            distribution is being made, by (B) the number of installment
            payments remaining to be made under the distribution period selected
            by the Director. Distributions shall be made in cash. The amount of
            any distribution under this Paragraph (i) will be charged pro-rata
            against the Director's interest in each Investment Option comprising
            the Distributable Account. Notwithstanding the foregoing, the last
            installment payment of the Distributable Account shall be adjusted
            to take into account deemed investment gains or losses for the
            period between the January 1 valuation date and the date of
            actual payment according to such methods and procedures adopted by
            the Committee.

            (ii) The annual distribution amount for each of the Stock Unit
            Accounts shall be determined on a share basis by dividing (A) the
            number of WPS Resources Stock Units credited to the relevant Stock
            Unit Account as of January 1 of the year for which the distribution
            is being made (subject to subsequent adjustment under Section 5.01),
            by (B) the number of installment payments remaining to be made under
            the distribution period selected by the Director, and then rounding
            the quotient obtained for all but the final installment to the next
            lowest whole number of WPS Resources Stock Units. The Committee will
            then direct that the Director receive shares of WPS Resources Stock
            and/or cash equal to the annual distribution amount. For any portion
            of the distribution that the Committee directs be satisfied by
            making a cash payment to the Director, the cash payment shall be
            determined by multiplying the annual distribution amount (or the
            portion of the annual distribution amount being satisfied in cash)
            by the closing price of WPS Resources Stock on January 21 of the
            year in which the distribution is being made, as such share price is
            reported in the Wall Street Journal's New York Stock Exchange
            Composite Transactions listing. If January 21 falls on a Saturday,
            Sunday or holiday, the calculation of the cash portion of the
            distributions will be made based upon the closing price as reported
            for the immediately preceding business day. The amount of any
            distribution under this Paragraph (ii) will be charged pro-rata
            against the Participant's interest in the WPS Stock Account and the
            Deferred Stock Unit Account.



    

Section 4.04.
Time of Distribution.


        Subject to the provisions of Sections 5.01 and 6.02, WPS Resources Stock
distributed to a Director shall be distributed on January 22 (or if January
22 falls on a Saturday, Sunday or holiday, the immediately following business
day). For distribution and tax reporting purposes, the value of WPS Resources
Stock distributed shall equal the number of shares distributed multiplied by the
closing price of WPS Resources Stock on January 21 (or if January 21 falls on a
Saturday, Sunday or holiday, the immediately preceding business day) of the year
in which the distribution is being made as reported in the Wall Street Journal's
New York Stock Exchange Composite Transaction listing. The cash portion of any
distribution will be made no later than March 1 of the year for which the
distribution is being made.

    

Section 4.05.
Other Distribution Rules.


        (a) Limit on Shares. Subject to adjustment as provided in subsection
(b) below, the total number of authorized but previously unissued shares of WPS
Resources Stock which may be distributed to Directors pursuant to the Plan shall
be one hundred thousand (100,000), which number shall not be reduced by or as a
result of (i) any cash distributions pursuant to the Plan or (ii) the
distribution to Directors pursuant to the Plan of any outstanding shares of WPS
Resources Stock purchased by or on behalf of the Trust.

        (b) Adjustments to Stock. In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
split-up, share combination or other change in the corporate structure affecting
WPS Resources Stock, such adjustment shall be made in the number and class of
shares which may be distributed pursuant to the Plan as may be determined to be
appropriate and equitable by the Committee in its sole discretion.


 

ARTICLE V. RULES WITH RESPECT TO WPS RESOURCES STOCK

AND WPS RESOURCES STOCK UNITS


     Section  5.01.
Transactions Affecting WPS Resources Stock.


        In the event of any merger, share exchange, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting WPS Resources Stock, the Committee may make appropriate
equitable adjustments with respect to the WPS Resources Stock Units (if any)
credited to the Account of each Director, including without limitation,
adjusting the date as of which such units are valued and/or distributed, as the
Committee determines is necessary or desirable to prevent the dilution or
enlargement of the benefits intended to be provided under the Plan.

    

Section 5.02.
No Shareholder Rights With Respect to WPS Resources Stock Units.


        Directors shall have no rights as a stockholder pertaining to WPS Resources
Stock Units credited to their Stock Account. No WPS Resources Stock Unit nor any
right or interest of a Director under the Plan in any WPS Resources Stock Unit
may be assigned, encumbered, or transferred, except by will or the laws of
descent and distribution. The rights of a Director hereunder with respect to any
WPS Resources Stock Unit are exercisable during the Director's lifetime only by
him or his guardian or legal representative.


 

ARTICLE VI. SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGE
IN CONTROL OF THE COMPANY


     Section  6.01.
Definitions.


        For purposes of this Article VI, the following terms shall have the following
respective meanings:

        (a) An "Affiliate" of, or a person "affiliated" with, a
specified person is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified and the term "Associate" used to indicate a
relationship with any person, means (i) any corporation or organization (other
than the registrant or a majority-owned subsidiary of the registrant) of which
such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (ii)
any trust or other estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a similar fiduciary
capacity, and (iii) any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person or who is a director or
officer of the registrant or any of its parents or subsidiaries.

        (b) A person shall be deemed to be the "Beneficial Owner" of any
securities:


            (i) which such Person or any of such Person's Affiliates or
            Associates has the right to acquire (whether such right is
            exercisable immediately or only after the passage of time) pursuant
            to any agreement, arrangement or understanding, or upon the exercise
            of conversion rights, exchange rights, or other rights, warrants or
            options, or otherwise; provided, however, that a
            Person shall not be deemed the Beneficial Owner of, or to
            beneficially own, (A) securities tendered pursuant to a tender or
            exchange offer made by or on behalf of such Person or any of such
            Person's Affiliates or Associates until such tendered securities are
            accepted for purchase or (B) securities issuable upon exercise of
            Rights pursuant to the terms of the Company's Rights Agreement with
            Firstar Trust Company, dated as of December 12, 1996, as amended
            from time to time (or any successor to such Rights Agreement) at any
            time before the issuance of such securities;

            (ii) which such Person or any of such Person's Affiliates or
            Associates, directly or indirectly, has the right to vote or dispose
            of or has "beneficial ownership" of (as determined
            pursuant to Rule 13d-3 of the General Rules and Regulations under
            the Act), including pursuant to any agreement, arrangement or
            understanding; provided, however, that a Person shall
            not be deemed the Beneficial Owner of, or to beneficially own, any
            security under this subparagraph (ii) as a result of an agreement,
            arrangement or understanding to vote such security if the agreement,
            arrangement or understanding: (A) arises solely from a revocable
            proxy or consent given to such Person in response to a public proxy
            or consent solicitation made pursuant to, and in accordance with,
            the applicable rules and regulations under the Act and (B) is not
            also then reportable on a Schedule 13D under the Act (or any
            comparable or successor report); or

            (iii) which are beneficially owned, directly or indirectly, by
            any other Person with which such Person or any of such Person's
            Affiliates or Associates has any agreement, arrangement or
            understanding for the purpose of acquiring, holding, voting (except
            pursuant to a revocable proxy as described in subsection (b)(ii)
            above) or disposing of any voting securities of the Company.



        (c) A "Change in Control" shall be deemed to have occurred if:


            (i) any Person (other than any employee benefit plan of the
            Company or of any subsidiary of the Company, any Person organized,
            appointed or established pursuant to the terms of any such benefit
            plan or any trustee, administrator or fiduciary of such a plan) is
            or becomes the Beneficial Owner of securities of the Company
            representing at least 30% of the combined voting power of the
            Company's then outstanding securities;

            (ii) one-half or more of the members of the Board are not
            Continuing Directors;

            (iii) there shall be consummated any merger, consolidation, or
            reorganization of the Company with any other corporation as a result
            of which less than 50% of the outstanding voting securities of the
            surviving or resulting entity are owned by the former shareholders
            of the Company other than a shareholder who is an Affiliate or
            Associate of any party to such consolidation or merger;

            (iv) there shall be consummated any merger of the Company or
            share exchange involving the Company in which the Company is not the
            continuing or surviving corporation other than a merger of the
            Company in which each of the holders of the Company's Common Stock
            immediately prior to the merger have the same proportionate
            ownership of common stock of the surviving corporation immediately
            after the merger;

            (v) there shall be consummated any sale, lease, exchange or other
            transfer (in one transaction or a series of related transactions) of
            all, or substantially all, of the assets of the Company to a Person
            which is not a wholly owned subsidiary of the Company; or

            (vi) the shareholders of the Company approve any plan or proposal
            for the liquidation or dissolution of the Company.



        (d) "Continuing Director" means (i) any member of the Board of
Directors of the Company who was a member of such Board on May 1, 1997,
(ii) any successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on such Board
and (iii) additional directors elected by a majority of the Continuing
Directors then on such Board.

        (e) "Person" means any individual, firm, partnership, corporation
or other entity, including any successor (by merger or otherwise) of such
entity, or a group of any of the foregoing acting in concert.

    

Section 6.02.
Amendments in Connection with a Change in Control.


        (a) Board Authority to Amend or Terminate Plan. Prior to the
occurrence of a Change in Control, the Board may exercise its authority under
Section 7.04, including, to the extent deemed necessary or desirable by the
Board in anticipation of a Change in Control, any of the following actions:


            (i) The Board may amend the Plan to eliminate WPS Resources Stock
            Units and cause the value of such units as of the Amendment date
            (such value to be determined under Section 2.04(c) to be reallocated
            to Reserve Account B. The term "Amendment Date" means the
            date on which an amendment to the Plan is validly adopted or the
            date on which the amendment is or purports to be effective,
            whichever is later.

            (ii) The Board may terminate the Plan and require that all
            benefits accrued to the date of termination (or such later date as
            the Board specifies) be distributed to Participants (or
            Beneficiaries) in a single sum regardless of a Participant's prior
            election as to the form and timing of benefit payments.



        (b) Automatic Amendments. Unless terminated by the Board pursuant to
subsection (a)(ii), the Plan shall automatically be amended upon a Change in
Control to provide that:


            (i) The rate of interest equivalent to be credited with respect
            to reserve Account A for each month following the Change in Control
            shall be the greater of (A) the rate of interest equivalent
            applicable with respect to Reserve Account A if such amount were
            calculated based upon the consolidated return on common shareholders
            equity of the Company (including for this purpose any successor
            corporation that is the survivor of a merger with the Company or any
            successor to that corporation) and all subsidiaries, and (B) a rate
            equal to two (2) percentage points above the prime lending rate at
            Firstar Bank, N.A. (or any successor thereto) as of the last
            business day of that month; and

            (ii) The rate of interest equivalent to be credited with respect
            to Reserve Account B for each month following the Change in Control
            shall be the greater of (A) the rate of interest equivalent
            otherwise applicable with respect to Reserve Account B if such
            amount were calculated based upon the consolidated return on common
            shareholders equity of the Company (including for this purpose any
            successor corporation that is the survivor of a merger with the
            Company or any successor to that corporation) and all subsidiaries,
            and (B) a rate equal to two (2) percentage points above the prime
            lending rate at Firstar Bank, N.A. (or any successor thereto) as of
            the last business day of that month. The minimum rate of interest
            equivalent under clause (B) shall cease to apply on the third
            anniversary of the Change in Control in the event that the Director
            is actively serving on the Board of the Company (or any subsidiary
            or affiliate of the Company) on such date.



        (c) Prohibition on Certain Amendments. Notwithstanding the foregoing,
on or after the effective date of a Change in Control, the Board or company may
not, without the written consent of the affected Director (or in the case of a
deceased Director, the Director's beneficiary) amend the Plan or take an action
to terminate the Plan that would:


            (i) Result in a decrease in the number of, or a change in the
            type of, Available Investment Options that were made available under
            the Plan immediately prior to the Change of Control; or

            (ii) Cause the Accounts to be valued under Section 2.05(c) less
            frequently than quarterly; or

            (iii) Impair or otherwise limit a Participant's rights to
            reallocate his Accounts under Section 2.05(d) as in effect on the
            date immediately prior to the Change in Control; or

            (iv) Decrease the interest rate credited under Reserve Account A
            or Reserve Account B as determined pursuant to subsection (b) above,
            except as specifically provided therein; or

            (v) Eliminate the distribution options made available under
            Section 4.01 or otherwise terminate any distribution elections then
            in effect.



    

Section 6.03.
Resolution of Disputes.


        If, after a Change in Control, (a) a dispute arises with respect to the
enforcement of the Director's rights under the Plan, or (b) any legal proceeding
shall be brought to enforce or interpret any provision contained in the Plan or
to recover damages for breach of the Plan, in either case so long as the
Director is not acting in bad faith or otherwise pursuing a course of action
that a reasonable person would determine to be frivolous, the Director shall
recover from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute or legal proceeding
("Expenses"), and prejudgment interest on any money judgment obtained
by the Director calculated at the rate of interest announced by Firstar Bank
Milwaukee, Milwaukee, Wisconsin (or any successor thereto), from time to time as
its prime or base lending rate from the date that payments to the Director
should have been made under this Plan. Within ten (10) days after the Director's
written request therefor, the Company shall pay to the Director, or such other
person or entity as the Director may designate in writing to the Company, the
Director's Expenses in advance of the final disposition or conclusion of any
such dispute or legal proceeding. In the case of a deceased Director, this
Section shall apply with respect to the Director's Beneficiary or estate.


 

ARTICLE VII. GENERAL PROVISIONS


     Section  7.01.
Administration.


        The Committee shall administer and interpret the Plan and supervise
preparation of Director elections, forms, and any amendments thereto. To the
extent necessary to comply with applicable conditions of Rule 16b-3, the
Committee shall consist of not less than two members of the Board, each of whom
is also a director of the Company and qualifies as a "non-employee
director" for purposes of Rule 16b-3. If at any time the Committee shall
not be in existence or not be composed of members of the Board who qualify as
"non-employee", then all determinations affecting Directors who are
subject to Section 16 of the Exchange Act shall be made by the full Board. The
Committee may, in its discretion, delegate any or all of its authority and
responsibility; to the extent of any such delegation, any references herein to
the Committee shall be deemed references to such delegee. Interpretation of the
Plan shall be within the sole discretion of the Committee and shall be final and
binding upon each Director and Beneficiary. The Committee may adopt and modify
rules and regulations relating to the Plan as it deems necessary or advisable
for the administration of the Plan. If any delegee of the Committee shall also
be a Director or Beneficiary, any determinations affecting the delegee's
participation in the Plan shall be made by the Committee.

    

Section 7.02.
Restrictions to Comply With Applicable Law.


        (a) General Restrictions. Notwithstanding any other provision of the
Plan, the Company shall have no liability to deliver any shares of WPS Resources
Stock under the Plan or make any payment unless such delivery or payment would
comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity. In addition, transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3 under the
Exchange Act. The Committee shall administer the Plan so that transactions under
the Plan will be exempt from Section 16 of the Exchange Act, and shall have the
right to restrict any transaction, or impose other rules and requirements, to
the extent it deems necessary or desirable for such exemption to be met.

        (b) Restriction on Transfer. Shares of WPS Resources Stock issued
under the Plan may not be sold or otherwise disposed of except (i) pursuant to
an effective registration statement under the Act, or in a transaction which, in
the opinion of counsel for the Company, is exempt from registration under the
Act; and (ii) in compliance with state securities laws. Further, as a condition
to issuance of shares of WPS Resources Stock under the Plan, the Director, his
Beneficiary or his heirs, legatees or legal representatives, as the case may be,
shall execute and deliver to the Company a restrictive stock transfer agreement
in such form, and subject to such terms and conditions, as shall be reasonably
determined or approved by the Committee, which agreement, among other things,
may impose certain restrictions on the sale or other disposition of any shares
of stock acquired under the Plan. The Committee may waive the foregoing
restrictions, in whole or in part, in any particular case or cases or may
terminate such restrictions whenever the Committee determines that such
restrictions afford no substantial benefit to the Company.

        (c) Additional Restrictions; Legends. All shares of WPS Resources
Stock delivered under the Plan shall be subject to such stock transfer orders
and other restrictions as the Committee may deem advisable under the Plan and
any applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any certificates to make appropriate references
to such restrictions.

    

Section 7.03.
Director Rights Unsecured.


        (a) Unsecured Claim. The right of a Director or his Beneficiary to
receive a distribution hereunder shall be an unsecured claim, and neither the
Director nor any Beneficiary shall have any rights in or against any amount
credited to his Account or any other specific assets of the Company or any
affiliate of the Company. The right of a Director or Beneficiary to the payment
of benefits under this Plan shall not be assigned, encumbered, or transferred,
except by will or the laws of descent and distribution. The rights of a Director
hereunder are exercisable during the Director's lifetime only by him or his
guardian or legal representative.

        (b) Contractual Obligations. The Company may authorize the creation of
a trust or other arrangements to assist it in meeting the obligations created
under the Plan. However, any liability to any person with respect to the Plan
shall be based solely upon any contractual obligations that may be created
pursuant to the Plan. No obligation of the Company shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Company or any
affiliate of the Company. Nothing contained in this Plan and no action taken
pursuant to its terms shall create or be construed to create a trust of any
kind, or a fiduciary relationship between the Company and any Director or
Beneficiary, or any other person.

    

Section 7.04.
Amendment or Termination of Plan.


        There shall be no time limit on the duration of the Plan. Except as otherwise
limited pursuant to Section 6.02, the Board (or where specified herein, the
Committee) may at any time amend or terminate the Plan, including but not
limited to modifying the terms and conditions applicable to (or otherwise
eliminating) Deferrals to be made on or after the amendment or termination date;
provided, however, that no amendment or termination may reduce or eliminate any
Account balance accrued to the date of such amendment or termination (except as
such Account balance may be reduced as a result of investment losses allocable
to such Accounts).

    

Section 7.05.
Administrative Expenses.


        Costs of establishing and administering the Plan will be paid by the Company.

    

Section 7.06.
Successors and Assigns.


        This Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns and the Directors and their heirs, executors,
administrators, and legal representatives.